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The authors conduct a field experiment in which they vary the sales force compensation scheme at an Asian enterprise that sells consumer durable goods. With variation generated by the experimental treatments, the authors model sales force performance to identify the effectiveness of various forms of conditional and unconditional compensation. They account for salesperson heterogeneity using a hierarchical Bayesian framework to estimate the model. They find conditional compensation in the form of quota bonus incentives to improve performance; however, such compensation may lead to lower future performance. The authors find little difference in effectiveness between a quota bonus plan and punitive bonus plans framed as a penalty for not achieving quota. They find that unconditional compensation, in the form of reciprocity, is effective at improving sales force performance only when it is given as a delayed reward; however, the effectiveness of this plan decreases with repeated exposure. The authors also find heterogeneity in the impact of compensation on performance across salespeople, such that unconditional compensation is more effective for salespeople with high base performance, whereas conditional compensation is equally effective across all types of salespeople.

Conceptually, customer relationship management (CRM) has been widely embraced by businesses. In practice, however, examples of success contrast with anecdotes where the diffusion of CRM into organizations continues to be a slow process and/or where CRM implementation outcomes have fallen short of expectations. Successful implementation depends on a number of factors such as fit between of a firm’s CRM strategy and programs and its broader marketing strategy, and intraorganizational and interorganizational cooperation and coordination among entities involved in implementation. Building on the results of a survey of the CRM-implementation-related experiences of 101 U.S.-based firms, in this article the authors identify factors associated with successful CRM implementation and advance directions for future research.

Empirical research in relationship management has tended to take a snapshot of a relationship at a given time and attempt to project its trajectory, despite agreement among researchers that a longitudinal perspective focused on process models advances the implications for practice. The authors use a field investigative approach to study, over time, the evolution of three industrial buyer–seller relationships in mature industrial markets. The relationships are characterized by various degrees of initial asymmetry and have evolved in dramatically different ways over time. Their findings suggest that weaker firms can structure and thrive in long-term relationships with powerful partners because initial asymmetries are subsequently redressed through the development of high levels of interpersonal trust across the dyad, which in turn leads to increased levels of interorganizational commitment.

In the preceding article, Vargo and Lusch (V&L; 2004) observe that an evolution is underway toward a new dominant logic for marketing. The new dominant logic has important implications for marketing theory, practice, and pedagogy, as well as for general management and public policy. Thus, their observations are likely to resonate with a broad cross-section of the business community. With the goal of stimulating discussion and debate, I invited some distinguished scholars to write brief commentaries on different aspects of V&L's article. I was delighted to receive a thoughtful and diverse set of comments. The ideas expressed in the article and the commentaries will undoubtedly provoke a variety of reactions from readers of Journal of Marketing. I hope you will enjoy reading, and thinking, about these scholars’ views on the fundamental premises of marketing as much as I did.

Although most published customer lifetime value models focus on strategic-level marketing decisions, managers also need models that enable them to make resource allocation decisions for individual customers. A common misperception among scholars and managers is that it is necessary to use individual-level customer profitability models to make such decisions. This article argues that a segment-based approach to customer profitability analysis can be a reasonable alternative to an individual model. The proposed stochastic segment-based approach retains the actionable information associated with individual-level analysis while also maintaining the simplicity of the more aggregate-level models. In this article, the authors develop such a segment-based assessment of customer profitability and then briefly describe an example of a major European retailer that successfully uses the approach to manage its customer base. Directions for future research in the area of stochastic customer equity modeling are also discussed.

The authors examine behavioral outcomes following a customer-initiated contact (CIC) with a manufacturer and develop a framework to explain the impact of vendor performance during a CIC on a customer's share of category requirements with a focal brand and word-of-mouth incidence following contact. The authors propose customer characteristics and context-specific factors that may relate to differences in the key characteristics of the underlying source model of share of category requirements and word of mouth. The authors then assess the overall importance of the explanatory variables in the source model and simultaneously test for systematic differences related to CIC-specific factors using survey data from more than 1700 CICs that involve more than 60 brands. A key assumption in much prior research that has examined customer–firm interactions is that CIC-specific factors, if they are included at all, create an automatic regularity that must be controlled for. The authors propose and find an additional effect. The responsiveness to factors under a firm's control varies across CICs, and therefore firms that adapt their processing have an advantage. Rather than provide a uniform response to all CICs, the authors' results offer managers several guidelines on how to customize their responses to the various CIC types and how to improve the efficiency and effectiveness of their firms' CIC management efforts.

Past research on the benefits of customer retention (BCR) has been characterized by the lack of a psychometrically adequate criterion. Research has primarily operationalized the BCR by using only repurchase intent or a factor score of several measures including repurchase intent, word of mouth, and price tolerance. In the process, it has ignored the possibility of a hierarchical ordering of the BCR measures that would lead to a unidimensional and cumulative BCR scale. In this article, the authors investigate this issue using a set of intent measures developed based on past work in customer retention, customer loyalty, brand loyalty, and satisfaction. As hypothesized, support is foundfor a unidimensional and cumulative BCR scale. The authors also investigate howfirms can use BCR along with satisfaction to monitor and manage customers. They propose that vendors use a customer management strategy that is based on managing both satisfaction and BCR.

Recently, there has been a growing trend toward long-term relationships between manufacturers and their suppliers. Although much as been written about the benefits of this shift to manufacturers, little is known about the benefits to supplier firms. In this study, we empirically assess the impact of long-term relationships with specific customers on the performance of supplier firms using cross-sectional and longitudinal information available in the Compustat collection of data bases and the Compact Disclosure data base. Our results indicate that maintaining long-term relationships with select customers does not come at the expense of the rate of sales growth. Suppliers in long-term relationships are able to achieve the same level of growth as firms that employ a transactional approach to servicing their customers. These suppliers are able to reduce costs over time through better inventory utilization; however, this reduction in cost seems to be bargained away by their customers through lower prices over time. Finally, the supplier firms in long-term relationships achieve higher profitability by differentially reducing their discretionary expenses such as selling, general, and administrative overhead costs to a greater extent than their counterparts who use a transactional approach to servicing their customers.

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