A relatively small number of purchase and return metrics can accurately predict customer profitability -and the likelihood of policy abuse. By using analytics to identify the few customers who cost the company the most money by abusing return policies before they make their next purchase, companies can prevent abusive returns, avoid PR disasters, and boost their profitability.

A cornerstone of manufacturing practice has been to separate complex tasks into simple ones for economies of scale, and service industry practice has followed a variation of this principle by splitting up high and low customer contact activities to cut costs. Low-contact activities are removed from front office jobs, standardized, and centralized in some remote back office to achieve scale economies. Here, the authors question this principle; the choice of how to organize back office work carries strategic implications. Their model provides four approaches illustrating different strategies, based on data from a study of retail bank lending operations and using examples from other service industries. The decoupling of front- and back-office operations hinges not only on cost but whether the service firm's strategy is one of cost leadership, dedicated service, premium service, or cheap convenience. Each distinct strategy poses a different set of trade-offs and important managerial issues. Decoupling can be eschewed to decrease costs, or embraced to enhance responsiveness in the front office.

Retailers have long assumed that bigger is better: megastores mean broader product selection and lower operating costs. But by networking smaller stores, retailers can replicate big-store advantages and offer shoppers greater convenience.