I’ve been reading and enjoying Super Crunchers, the new book by Ian Ayres that we excerpted earlier on the blog. One section of the book deals with the data that firms gather on their customers, and how the firms can use that data to address customer habits:
Hertz, after analyzing terabytes of sales data, knows a lot more than you do about how much gas you’re likely to leave in the tank if you prepay for the gas. … Best Buy knows the probability that you will make a claim on an extended warranty.
This made me wonder further about a situation I’ve wondered about in the past: do restaurants ever blacklist their low-spending customers?
Let’s say you call to make a reservation at a fairly high-end restaurant. It can’t be that hard for the reservation agent to access the data on your past visits. Imagine that the last few times you went to this restaurant, you and your spouse ordered salads, split an entrée, had no cocktails, drank tap water instead of Panna or wine (click here for a discussion of wine markups), and had coffee with no dessert. And, for added effect, let’s say that you lingered for a while over your coffee, tying up the table for a potentially more profitable customer. Maybe you even registered a fairly serious complaint about your meal, as I once did.
What does the data-savvy restaurateur do with customers like these?
Perhaps someone out there in the business can answer the question: do restaurants turn down reservations for customers who have proven themselves to spend too little money? Perhaps it never happens (but I wouldn’t be surprised if it does); perhaps restaurants don’t have fingertip access to past-spending data (but I would be disappointed if they don’t).
If restaurants do engage in this practice, they certainly wouldn’t want to make it publicly known … or would they? If they did, word might get around that if you don’t order a bottle or two of wine, then you don’t get a table next time you call. Which might be the kind of strategy that makes a cold-hearted profit maximizer’s heart sing.