Big Businesses Are Secretly Rating Customers

Everyone is a critic these days. We rate and review restaurants, hair salons and even car quick lubes, among many others. But, did you know that many big businesses are secretly rating you?

They are using what is called a Customer Lifetime Value score, or CLV. And, it can determine how a given company treats you. For example, how long you’ll be put on hold.

“Depending on who you are, based on your phone number, you may actually talk with someone faster if you are a more important or valuable customer,” said Westminster College associate marketing professor, Brian Jorgensen.

So, what makes you more valuable to a company?

If you are a frequent shopper without having to be enticed by bargains, you are likely going to have a higher CLV score. But, if you do things like: make frequent complaints with customer service, shop only for the big deals or return items often, well, your score is probably low in the gutters.

“These lifetime value scores are approximations,” explained Jorgensen. “They’re (businesses) basically looking into a crystal ball and based on what has happened in the past and try to predict what’s going to happen in the future.”

Besides what level of service you’ll get, Jorgensen says your CLV score can play a role in what products and ads you’ll see and even the prices you might pay for a product or service.

In November, the Wall Street Journal revealed how businesses collect and use data to determine a consumer’s CLV score. But, Jorgensen says the concept has been around for years. First, primarily as a way for businesses to rate other businesses that bought their goods or services. Typically, there was not a lot of data available for individually consumers. At least, not enough to build a CLV score.

Now, the advent of online sales and data brokers allows businesses like online stores, airlines and credit card issuers to rate their individual consumers much more easily.

“They know exactly who you are, what you purchased and what you’ve looked at,” Jorgensen said. “And, there’s all kinds of information that they could use to estimate how valuable you are to them.”

There is no uniform score. Different companies score you on different factors. Some only consider your shopping patterns, while others include data like age, marital status and zip code.

But, CLV scores themselves are kept secret from consumers.

“It makes me not happy about that,” exclaimed West Jordan resident Clarissa Koonts.

She says she’s bothered by customers being treated different because of a score.

“I don’t feel like that’s fair at all but it doesn’t surprise me,” said Daniel Zimmerman. “If it effects the way they treat me then I feel like it is a big deal.”
“We all want to be treated equally,” said Jorgensen.

But he says with the growth of both online shopping and data collection, we should expect the use of CLV scores to grow.

“Companies do have so much data on us,” he explained. “They do have the ability to treat us differently based on our purchasing habits and so forth.”