The firm-customer exchange process consists of three key parts: (1) firm-initiated marketing communications, (2) customer buying behavior, and (3) customer product return behavior.To date, the literature in marketing has largely focused on how marketing communications affect customer buying behavior and, to some extent, how past buying behavior affects a firm's decisions to initiate future marketing communications. However, the literature on product returns is sparse, especially in relation to analyzing individual customer product return behavior. Although the magnitude of the value of product returns is known to be high ($100 billion per year), how it affects customer buying behavior is not known because of a lack of data availability and understanding of the role of product returns in the firm-customer exchange process. Given that product returns are considered a hassle for a firm's supply chain management and a drain on overall profitability, it is important to study product return behavior. Thus, the authors empirically demonstrate the role of product returns in the exchange process by determining the exchange process factors that help explain product return behavior and the consequences of product returns on future customer and firm behavior. In addition, the authors demonstrate that product returns are inevitable but by no means evil.

Many firms have experienced greater success through implementing relationship marketing strategies. This is achieved by gaining knowledge about their own customers through database marketing and about the general marketplace through marketing research. Over time, this has led firms to adopt a general framework which we call the conventional path to profitability. This conventional framework suggests that new product innovation leads to acquisition, acquisition combined with a rich experience leads to satisfaction, satisfaction leads to loyalty and customer retention, and loyalty/retention leads to profitability. However, we show that some of the links in the framework are weak based on both academic research and marketplace realities. Consequently, we reverse the logic of the conventional path to profitability. We introduce a new approach that starts the customer relationship management strategy with customer profitability and the notion that different customers should be rewarded and satisfied differently. In addition, we outline a strategy that relationship marketing firms can implement, leading to higher levels of customer profitability and offer directions for future research.

The technology for managing customer relationships has gotten fairly sophisticated. Companies can draw on databases that tell them how much each customer has purchased and how often, which they may supplement with detailed demographic profi les. By applying statistical models, they can predict not only when each customer is likely to make a future purchase but also what he or she will buy and through which channel. Managers can use these data to estimate a potential lifetime value for every customer and to determine whether, when, and how to contact each one to maximize the chances of realizing (and even increasing) his or her value.

It is becoming increasingly apparent from the literature that marketers need to consider customer-level information when they generate a marketing strategy for the firm. In this article, the authors develop a customerfocused framework that uses a marketing strategy with an overall objective of maximized financial performance. This strategy is driven by seven customer-level marketing tactics and shows how actual customer data can be used to generate an actionable marketing strategy leading to optimal levels of profitability, customer equity, and shareholder value. In addition, the authors discuss a successful implementation of this strategy for several business-to-business and business-to-consumer firms and offer insights as to how to customize an implementation strategy for any firm, along with presenting potential challenges a firm may encounter during the implementation process. Several suggestions for future research are offered to explore and harness this newly available evidence.

ROI is usually calculated in isolation by comparing a company’s ability to generate revenue in any given year in relation to how much it costs to generate that revenue. However, this is not necessarily an optimal method for measuring and then maximizing ROI. Companies need to consider other factors that drive firm performance when considering ideal investment strategies. Additionally, companies must look at the relationship between profitability and ROI and decide how to manage each metric simultaneously.

There is an ever-present need for managers to justify marketing expenditures to the firm. This can only be done when we can establish a direct link between marketing metrics and future customer value and firm performance. In this article, we assess the marketing literature with regard to marketing metrics. Subsequently, we develop a framework that identifies key metrics that firms should focus on that can give a firm a better picture of how they got to where they are now and insights towards how they can continue to grow into the future.We then identify several organizational challenges that need to be addressed in order for firms to build the capabilities of collecting the right data, measuring the right metrics, and linking those metrics to customer value and firm performance. Finally, we offer guidelines for future research with regard to marketing metrics to help firms establish successful marketing strategies, measure marketing effectiveness, and justify marketing expenditures to top management.