The Second Exchange: Managing Customer Information in Marketing Relationships

Abstract

The paper introduces the concept of the second exchange in customer relationships that is distinct from the first exchange of goods or services. The second exchange is based on the information consumers disclose in the course of a marketing transaction where personal information is exchanged for benefits derived from the use of the information. Propositions developed from our model demonstrate how strategically managing the benefits and risks (invasion of privacy) of this exchange process can impact customer acquisition and retention and thus, the firm's bottom line.