Which of the following statements about customer relationships is true?
A) Customers who are not profitable at the beginning of a relationship are highly unlikely to become profitable.
B) Small increases in customer retention rate can translate into substantial increases in a company's profits.
C) Today's successful companies are more likely to take a transaction-based view than a relationship-based view.
D) It costs more to retain existing customers than to recruit new customers.
E) Relationship marketing focuses only on those customers who are currently profitable.

Question

Quizplus · Accepted Answer

Studies have shown that even a small increase in customer retention rate can lead to a significant increase in profits for a company. It is often less expensive to retain existing customers than to acquire new ones, making customer relationships a valuable asset for businesses.

Option A is incorrect; while it is true that not all customers will become profitable, there is potential for some to become more valuable over time.

Option C is incorrect; successful companies today are more likely to prioritize building and maintaining strong customer relationships.

Option D is incorrect; retaining existing customers can be less expensive than acquiring new ones, and it often leads to greater long-term value for the company.

Option E is incorrect; relationship marketing aims to build and strengthen connections with customers, not just those who are currently profitable.

Which of the Following Statements About Customer Relationships Is True