This is an MIT Sloan Management Review article. Customers are often involved in the design or delivery of services, and in this respect, they function as co-producers of the service. What happens when customers fail to perform their roles effectively? Customer failure is not uncommon; research indicates that customers cause about one-third of all service problems. To study the issue of customer failure and its prevention, the authors conducted interviews with managers and customers in a variety of industries about experiences of customer failure, developed case studies related to the topic, and conducted secondary research to identify examples of best practices in customer-failure prevention. The authors conclude that recovering from instances of customer failure is difficult and that companies should focus instead on preventing them. An effective three-step approach is: collect diagnostic data about where customer failures occur, analyze the root causes of cases of the failure (e.g., technology, people, process issues), and establish preventive solutions, such as process redesign. The authors cite examples of companies that try to prevent customer failures. For instance, Weight Watchers International Inc. customers may offer each other encouragement at meetings and, thus, help prevent one another from failing in their weight-loss plans.

Customer relationship management (CRM) requires the alignment of three building blocks: insight into customer decision making, information about customers, and information processing capability. However, its emphasis on the latter has outpaced the first two, so that CRM rarely realizes its full potential. The guidelines presented here can help managers build a full-spectrum information portfolio for CRM that, through the thoughtful integration of existing tools, information properties, and communication channels, can provide a more complete picture of customers and form the basis for long-lasting and profitable relationships with them.