I think the real point of CRM is avoiding "bad revenue"

Good morning, まさきん here.

I was rereading an old blog of mine and found some notes on CRM. I wrote them back in 2016, prompted by a book I’d just read. Nearly a decade later, the thinking still doesn’t feel dated to me. So I wanted to rewrite it here.

The word “CRM” covers too much ground

CRM and customer loyalty are terms that come up constantly in marketing. What bothers me is just how wide a range they cover.

Sometimes it’s framed as a mindset — “hospitality matters.” Other times it’s framed as the setup steps for a retargeting ad. Same word, completely different level of the conversation. Say there’s a project billed as “improving the customer experience.” Open it up, and it turns out to be nothing more than ad segmentation for a specific audience. That’s not a rare pattern.

Covering a lot of ground isn’t bad in itself. But it’s also a slightly precarious state to be in. If the definition stays vague, the way you evaluate your efforts drifts too. Open rates, click rates, recent conversion counts — those numbers are easy to track. It’s tempting to judge success or failure purely by the metrics that are easiest to grab. Meanwhile, you might be quietly eroding the relationship with the customer without even noticing.

What counts as “bad revenue”

I think the real point of CRM is not creating “bad revenue.” Bad revenue is revenue that shows up in the short-term numbers but costs you long-term trust.

Take a one-off purchase driven entirely by a discount, for example. It’s a bit like teaching the customer, yourself, that they should only buy when it’s cheap. Even if the number of discount-dependent customers grows, that rarely translates into sales at full price.

Over-eager upselling strikes me as the same thing. Push a plan or a feature beyond what someone actually needs, and it can lead to returns or complaints. In the end, doesn’t it just come back around as a cancellation? The same pattern shows up in standard email-marketing scenarios like cart-abandonment follow-ups or win-back campaigns — keep sending discount coupons, and eventually people only open the email when there’s a discount in it.

Revenue like this shows up fine in short-term KPIs. But from a customer lifetime value perspective, it tends to be a net negative. The profit per customer is usually larger for the ones who stick around.

What you can actually do to avoid it

Looked at through the lens of avoiding bad revenue, there’s quite a bit you can do in practice.

One is making subscription cancellation easy to find. Deliberately hiding the cancel button might lower your churn rate in the short run. But a customer who was strong-armed into staying isn’t coming back. Even in Japan, a 2022 law change tightened the rules around designs that make it hard to find the cancellation flow for subscriptions. It feels like the baseline expectation itself has been rising.

Another is telling people about a product’s limits before they buy. Saying “this isn’t a good fit for that use case” upfront takes some nerve. But isn’t that better for trust than having the customer discover it after the purchase? Given the power word of mouth actually has, being upfront from the start seems better than getting a bad review later. In the end, I think that’s what protects your reputation.

Both of these look like a loss if you’re only watching short-term sales. Looked at over a longer horizon, though, this is exactly how you build up “good revenue.”

One book gave me the theoretical backbone

At the time, there was a book I read to organize this thinking. It’s [an introduction to customer loyalty strategy that drives revenue], by Naoki Endo and Yukiko Takei (originally published in Japanese).

Reading it, something clicked for me. Customer loyalty is really just the idea of turning someone into a regular. It’s the most basic idea in doing business, period.

In retail and services, this has been standard practice forever. As a business grows, the work gets divided across more and more roles, and this basic idea gets harder to see. The buzzword “CRM” might actually be making things more confusing than they need to be.

The book offers a framework for looking at the customer relationship through numbers. But it also makes clear that underneath, there’s no special theory at work. How do you catch early signs that someone’s drifting away, not just watching sales and visit counts? How do you account for the satisfaction that numbers alone can’t capture? The book carefully works through how to approach questions like these. In the end, it’s about the accumulation of making the one person in front of you happy. It’s a book that brought me back to something obvious, and made me look at it again.

It applies just as directly to household spending

Writing all this out, I realized this isn’t just a work topic. The same lens applies to my own spending habits.

Think about the subscription sitting unused at home, or the monthly service you’re on autopilot with. The initial pitch was appealing, but looking back, wasn’t it actually “a bad purchase”? Gym memberships and streaming subscriptions have a way of quietly becoming that.

The standard for reviewing your fixed costs might be simpler than it looks: does this company avoid creating bad revenue with you? A company that makes cancellation easy already earns a bit of trust just for that. On the other hand, some companies try to hold on to you by making it a hassle to leave. Those are the ones I’d rather keep my distance from.

Your phone plan might be one of those cases too. Might be worth checking whether the provider makes signing up and switching easy to understand.

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