Question 1

Winning companies improve the value of their customer base by excelling at each of the following strategies EXCEPT ________.
A)retaining all customers regardless of profitability
B)reducing the rate of customer defection
C)increasing the longevity of the customer relationship
D)making low-profit customers more profitable or terminating them
E)focusing disproportionate efforts on high-value customers

Accepted Answer

Retaining all customers regardless of profitability is not a successful strategy because it may result in investing resources on customers who do not bring value to the company. Winning companies focus on the customers who generate higher profits and either make low-profit customers more profitable or terminate them.

Question 2

Customer profitability analysis (CPA)is best conducted with the tools of an accounting technique called ________.
A)input-output analysis
B)factor analysis
C)revenue-based costing (RBC)
D)activity-based costing (ABC)
E)future date costing (FDC)

Accepted Answer

Activity-based costing (ABC) is the best tool for conducting customer profitability analysis (CPA). This is because ABC provides a detailed analysis of the costs associated with each activity involved in satisfying a customer's orders, rather than simply assigning overhead costs based on a single allocation method. By assigning costs to specific activities, ABC enables managers to identify which costs are specifically incurred in serving each customer and to make decisions about pricing, product mix, and customer service accordingly.

Question 3

Customers who enthusiastically recommend the company and its products and services to others are known as ________.
A)potentials
B)advocates
C)members
D)prospects
E)partners

Accepted Answer

The term "advocates" refers to customers who serve as enthusiastic promoters of a company's products or services and actively recommend them to others. This is a key aspect of building a strong brand reputation and cultivating long-term customer loyalty. The other choices, such as potentials, members, prospects, and partners, do not specifically refer to this type of customer behavior.

Question 4

People with the motivation,ability,and opportunity to make a purchase are known as ________.
A)potentials
B)advocates
C)members
D)prospects
E)partners

Accepted Answer

The term used for people with the motivation, ability, and opportunity to make a purchase is prospects. Options A, B, C, and E are incorrect as they do not apply to the context given in the question.

Question 5

Customer relationship management enables companies to provide excellent real-time customer service through the effective use of _______.
A)reports from mystery shoppers
B)survey data from customers who have defected
C)market research into overall consumption trends
D)individual account information
E)demographic trend data

Accepted Answer

Customer relationship management relies on the use of individual account information to track customer needs, preferences, and interactions in real-time, allowing for personalized and efficient customer service. Reports from mystery shoppers, survey data from customers who have defected, and demographic trend data may be useful in understanding overall consumer behavior, but they do not provide the level of individualized insights necessary for effective CRM. Market research into overall consumption trends may inform CRM strategy, but it is not the primary tool used in delivering real-time customer service.

Question 6

Most companies have learned that the ________ are often the most profitable because of service expectations and their willingness to pay almost full price.
A)large-size customers
B)midsize customers
C)small-size customers
D)niche customers
E)target market customers

Accepted Answer

The answer of Most companies have learned that the ________...

Question 7

All of the following would be among the Peppers and Rogers's four-step framework for one-to-one marketing that can be adapted to CRM marketing EXCEPT ________.
A)customizing products,services,and messages to each customer
B)interacting with individual customers to learn their needs
C)always offering the lowest price
D)differentiating customers in terms of their needs and value to the company
E)identifying your prospects and customers

Accepted Answer

The four-step framework for one-to-one marketing includes customizing products, interacting with customers to learn their needs, differentiating customers based on their value, and identifying prospects and customers. The framework does not involve always offering the lowest price, which is not sustainable or profitable for the company.

Question 8

The aim of customer relationship management (CRM)is to produce high customer ________.
A)value
B)loyalty
C)profitability
D)satisfaction
E)equity

Accepted Answer

The answer of The aim of customer relationship management (CRM)is...

Question 9

Acquiring new customers can cost ________ times more than satisfying and retaining current customers.
A)two
B)three
C)five
D)seven
E)10

Accepted Answer

Acquiring new customers can cost five times more than satisfying and retaining current customers. This highlights the importance of customer retention and building strong customer relationships.

Question 10

Although actual costs vary from business to business depending on the complexity of the sales process,the most expensive customer acquisition method based on cost per solicitation is ________.
A)personal selling
B)direct mail
C)telemarketing
D)banner advertisements
E)e-mail

Accepted Answer

Personal selling involves the use of a sales force to establish personal contact with potential customers and is often the most expensive customer acquisition method due to the high cost of hiring, training, and compensating sales representatives. Additionally, personal selling often involves multiple interactions with potential customers before a sale is made, further driving up costs. Direct mail, telemarketing, banner advertisements, and email are generally less expensive methods of customer acquisition than personal selling.

Question 11

Another term for high customer ________ is customer churn.
A)retention
B)defection
C)value
D)perception
E)belief

Accepted Answer

High customer defection means that customers are leaving the company or not continuing to use its products or services. This is also known as customer churn. Option A (retention) is the opposite of customer churn and would indicate that customers are staying with the company. Options C, D, and E are not directly related to the concept of customer churn.

Question 12

A(n)________ customer is a person,household,or company that over time yields a revenue stream that exceeds by an acceptable amount the company's cost stream of attracting,selling,and servicing that customer.
A)profitable
B)semiprofitable
C)unprofitable
D)niche
E)target

Accepted Answer

A profitable customer is one who generates more revenue for the company than the cost of attracting, selling, and servicing them. This kind of customer represents a good investment for the company and is a desirable target for marketing and sales efforts. Semiprofitable customers may generate some revenue, but not enough to justify the cost of acquiring and serving them, while unprofitable customers actually cost the company more than they generate in revenue. Niche and target customers are not directly related to profitability, as they refer to specific segments of the market that a company is trying to reach.

Question 13

A customer touch point in the airline industry would include an item such as ________.
A)reservations
B)mechanics' ability to service the airplanes
C)ease of access to the airport
D)the value of air travel versus surface transportation
E)competency of a travel agent

Accepted Answer

Reservations are a crucial customer touch point in the airline industry as it is often the first interaction a customer has with the airline and can set the tone for the rest of their experience.

Question 14

Satisfied customers constitute the company's ________.
A)customer relationship capital
B)customer churn
C)prospects
D)high-value customers
E)customer touch points

Accepted Answer

Satisfied customers are a valuable asset to a company in terms of customer relationship capital. This includes factors such as their loyalty, repeat business, and positive word-of-mouth marketing. Customer churn refers to the rate at which customers leave a company, prospects are potential customers who have not yet made a purchase, high-value customers are those who generate significant revenue for a company, and customer touch points are the points of interaction between a customer and a company. While some of these factors may be related to satisfied customers, none of them encompass the idea of satisfied customers being a company's most valuable asset in terms of customer relationship capital.

Question 15

Typically,________ gains the most benefit from introducing a frequency program.
A)the first company to introduce a frequency program in an industry
B)the fast follower,who is second to introduce a frequency program in an industry,
C)the industry sales leader
D)the niche player in the industry
E)the low-cost leader in the industry

Accepted Answer

The answer of Typically,________ gains the most benefit from introducing...

Question 16

Harley-Davidson sells more than motorcycles and accessories.Its dealerships also sell branded clothing and licensed goods.This expansion of dealership sales offerings is an attempt to increase the value of the customer base by ________.
A)reducing the rate of customer defection
B)increasing the longevity of the customer relationship
C)enhancing the growth potential of each customer through cross-selling
D)making low-profit customers more profitable
E)terminating low-profit customers

Accepted Answer

By offering branded clothing and licensed goods, Harley-Davidson is engaging in cross-selling, which enhances the growth potential of each customer. This not only increases the value of the customer base but also strengthens the customer relationship and reduces the rate of customer defection. Terminating low-profit customers or making them more profitable is not mentioned in the statement.

Question 17

When companies provide rewards to customers who buy frequently and in substantial amounts,this is referred to as ________.
A)benefit programs
B)frequency programs
C)satisfaction programs
D)loyalty programs
E)quality programs

Accepted Answer

The answer of When companies provide rewards to customers who...

Question 18

The 20-80 rule reflects the idea that ________.
A)the top 20% of customers often generate 80% of the company's profits
B)the top 20% of customers are highly satisfied and 80% of customers will recommend the company to a friend
C)20% of customers are unprofitable,and 80% make up a company's profits
D)20% of the company's profits are generated by the top 80% of customers
E)any new product offering will be accepted by 20% of the customers immediately,but 80% of the customers will be up for grabs throughout the product's life cycle

Accepted Answer

The 20-80 rule, also known as the Pareto Principle, states that 20% of the input generates 80% of the output. In the case of business, this translates to the top 20% of customers often generating 80% of the company's profits.

Question 19

All of the following are methods to form strong customer bonds EXCEPT ________.
A)creating superior products,services,and experiences for the target market
B)making it easy for customers to reach the appropriate company personnel and express their needs,perceptions,and complaints
C)organizing and making accessible a database of information on individual customer needs,preferences,contacts,purchase frequency,and satisfaction
D)running award programs recognizing outstanding employees
E)concentrating the planning and management of the customer satisfaction and retention process within the marketing department

Accepted Answer

While concentrating the planning and management of the customer satisfaction and retention process within the marketing department is important, it is not the only method to form strong customer bonds. A, B, C, and D are all valid methods to create strong customer bonds.

Question 20

________ describes the net present value of the stream of future profits expected over the customer's lifetime purchases.
A)Activity-based costing
B)Customer profitability analysis
C)Customer value analysis
D)Customer-perceived value
E)Customer lifetime value

Accepted Answer

Customer lifetime value (CLV) is a metric that calculates the net present value of the total stream of profits that a customer will generate over their lifetime purchases. CLV takes into account factors such as the customer's purchase frequency, average purchase value, and retention rate to estimate future profits. This analysis can help companies make decisions on customer acquisition, retention, and segmentation strategies based on the value each customer brings to the business.

Quiz 5: Creating Customer Value, satisfaction, and Loyalty

Winning companies improve the value of their customer base by excelling at each of the following strategies EXCEPT ________.

Customer profitability analysis (CPA) is best conducted with the tools of an accounting technique called ________.

Customers who enthusiastically recommend the company and its products and services to others are known as ________.

People with the motivation,ability,and opportunity to make a purchase are known as ________.

Customer relationship management enables companies to provide excellent real-time customer service through the effective use of _______.

Most companies have learned that the ________ are often the most profitable because of service expectations and their willingness to pay almost full price.

All of the following would be among the Peppers and Rogers's four-step framework for one-to-one marketing that can be adapted to CRM marketing EXCEPT ________.

The aim of customer relationship management (CRM) is to produce high customer ________.

Acquiring new customers can cost ________ times more than satisfying and retaining current customers.

Although actual costs vary from business to business depending on the complexity of the sales process,the most expensive customer acquisition method based on cost per solicitation is ________.

Another term for high customer ________ is customer churn.

A(n) ________ customer is a person,household,or company that over time yields a revenue stream that exceeds by an acceptable amount the company's cost stream of attracting,selling,and servicing that customer.

A customer touch point in the airline industry would include an item such as ________.

Satisfied customers constitute the company's ________.

Typically,________ gains the most benefit from introducing a frequency program.

Harley-Davidson sells more than motorcycles and accessories.Its dealerships also sell branded clothing and licensed goods.This expansion of dealership sales offerings is an attempt to increase the value of the customer base by ________.

When companies provide rewards to customers who buy frequently and in substantial amounts,this is referred to as ________.

The 20-80 rule reflects the idea that ________.

All of the following are methods to form strong customer bonds EXCEPT ________.

________ describes the net present value of the stream of future profits expected over the customer's lifetime purchases.