Ethical issues in CRM

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Customer relationship management, or CRM, is the business practice of managing all the ways in which a company interacts with its customers. Areas covered by CRM include not only sales and marketing but customer service and technical support.

Effective CRM requires a company to collect and maintain large amounts of data about its customers; this data collection raises a number of ethical issues.

Privacy and confidentiality

Privacy and confidentiality are at the heart of many ethical issues related to CRM. Companies have a responsibility to collect their information from legitimate sources without violating the privacy of the customer. In some cases, sensitive data may be gathered, including credit card or bank details. In these cases, the company must protect this information; poor data security or sloppy procedures could result in harm to the customers that CRM is intended to benefit.

Customer participation

One of the most important features of ethical CRM is that customer participation is voluntary. Companies who collect data on customers or potential customers without their knowledge or agreement are taking an easy but potentially unethical options. Similarly, some customers may wish to withdraw from a CRM program -- if this is the case, data stored about these customers needs to be destroyed. Collecting or maintaining this information without the consent of the subject is a violation of privacy.

Using CRM data

In addition to obtaining and storing CRM data responsibly, companies have an obligation to use it for the purpose for which it was obtained. Sharing customer data with other companies, for instance, can be a useful part of CRM, but selling on customer information or allowing other companies to use it for their own purposes represents a violation of the relationship between company and customer. Most companies take pains to make it clear to their customers that they do not resell or share customer information.


Journalist Alain Jourdier may have asked a prescient question in 2002 when he wondered whether banks and other lenders were using customer data to market sub-prime mortgages to at-risk borrowers. Banks, he argued, were using their detailed knowledge of customers to sell them products which were not the best for them but actually likely to harm them financially. In cases like these, companies are at a significant information advantage compared to their customers; it is up to the company to use this advantage ethically.