Question 1

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 someone who generates more revenue for the company than the cost it takes to acquire and retain them. This makes them a valuable asset to the company and can lead to long-term success. Semiprofitable customers may generate some revenue, but not enough to outweigh the costs, while unprofitable customers actually cost the company more than they bring in. Niche and target customers refer to specific segments of the market that a company is trying to reach.

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

Customer profitability analysis is best conducted with the tools of activity-based costing (ABC) which assigns costs to products and services based on the activities involved in creating them. ABC provides more accurate and detailed information about the costs associated with serving specific customers, allowing for a thorough analysis of customer profitability.

Question 3

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

Offering branded clothing and licensed goods allows for cross-selling to customers who may not be interested in purchasing a motorcycle or accessories. This enhances the growth potential of each customer by increasing the range of products they may be interested in buying from the dealership.

Question 4

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

Peppers and Rogers's four-step framework for one-to-one marketing includes customizing products, interacting with individual customers, differentiating customers based on their needs and value to the company, and identifying prospects and customers. Offering the lowest price is not a part of this framework.

Question 5

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

Concentrating the planning and management of the customer satisfaction and retention process within the marketing department is not a method to form strong customer bonds. Instead, it is important to involve all departments and employees in creating a customer-focused culture throughout the organization.

Question 6

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 7

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

Customer relationship capital refers to the value a company derives from having satisfied customers who remain loyal and continue to do business with the company over time. It includes customer retention, repeat business, and positive word-of-mouth recommendations. Satisfied customers are the foundation of a company's customer relationship capital.

Question 8

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 heavily on the use of individual account information in order to provide personalized and real-time customer service. Reports from mystery shoppers, survey data from customers who have defected, and demographic trend data may also be useful in CRM, but are not the primary method for achieving real-time customer service. Market research into overall consumption trends is also not directly related to CRM.

Question 9

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

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

Question 10

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

According to multiple studies, acquiring new customers can cost up to five times more than retaining current customers. It is therefore more cost-effective for a business to focus on keeping their existing customers happy rather than solely focusing on acquiring new ones.

Question 11

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 winning strategy as it can lead to resources being wasted on unprofitable customers and neglecting high-profit customers. Winning companies focus on retaining high-value customers and improving profitability of low-profit customers, while terminating unprofitable customers if necessary.

Question 12

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 first company to introduce a frequency program in an industry typically gains the most benefit as they can set the standard, capture customer loyalty early, and create barriers to entry for competitors.

Question 13

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

Midsize customers are often the most profitable because they have service expectations similar to large customers but are more willing to pay closer to full price compared to large customers who often demand discounts.

Question 14

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

Accepted Answer

Customer churn refers to customers who stop doing business with a company, which is the opposite of customer retention. Therefore, the answer is B) defection.

Question 15

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 approximately 80% of effects come from 20% of causes. In business, this principle is often applied to customer behavior, meaning that 80% of a company's profits come from 20% of its customers. This means that companies should focus their attention on the top 20% of customers as they are the ones generating the most profits.

Question 16

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 direct contact with potential customers and can be very expensive due to the high salaries and commissions earned by salespeople. It also requires a lot of time and effort to cultivate relationships with prospects and close sales. On the other hand, direct mail, telemarketing, banner advertisements, and e-mail may have lower costs per solicitation, but may not be as effective in converting prospects into customers.

Question 17

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 they are the first point of contact between the customer and the airline. This includes the ease of making a reservation, the accuracy of the information provided, and the level of customer service received during the reservation process.

Question 18

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 primary aim of customer relationship management (CRM) is to produce high customer loyalty by managing and analyzing customer interactions and data throughout the customer lifecycle.

Question 19

________ 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 is a measure that calculates the total worth of a customer to a business over the entire period of their relationship. It takes into account all of the profits that the customer is expected to generate through future purchases, which can help companies make better decisions about where to allocate resources and how to prioritize customer acquisition and retention efforts.

Question 20

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

Prospects are individuals who have the motivation, ability, and opportunity to make a purchase, but have not yet made one. They are potential customers who may have shown interest in a product or service, but have not yet committed to making a purchase. Therefore, prospects are the best choice for this question.

Quiz 5: Creating Customer Value, Satisfaction, and Loyalty

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.

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

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 ________.

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 ________.

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

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

Satisfied customers constitute the company's ________.

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

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

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

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

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

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

Another term for high customer ________ is customer churn.

The 20-80 rule reflects the idea that ________.

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

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

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

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