Deck 12: CRM Program Measurement and Tools

Question 1

Forrester Research Inc. found that 30% of Fortune 1000 firms had no metrics for their CRM projects.

Answer 1

True

Question 2

As companies lose customers, their customer satisfaction scores fall.

Answer 2

False

Question 3

Customers realize that if they switch brands, they will probably experience no loss in quality.

Answer 3

True

Question 4

AT&T found that perceived value, not satisfaction or loyalty, was a better measure of retention.

Question 5

Customers who participate in satisfaction surveys register lower satisfaction scores because of the imposition.

Question 6

The best measure of future customer value is past customer value.

Question 7

RFM stands for recency, frequency and monetary value.

Question 8

Developing closer bonds, avoiding defection, changing behavior could all be types of retention.

Question 9

It has been shown that if a company wants to increase CLV, acquisition measures have a greater effect than customer retention.

Question 10

NPS stands for Net Product Score.

Question 11

Jill Dyche reported that 90 percent of the 50 largest CRM users admitted they were unable to quantify a return on their CRM investment.

Question 12

The Giga Information Group found that only 30 percent of companies involved in CRM deployment measured benefits

Question 13

Different effectiveness measures are needed for company CRM efforts focusing on acquiring new customers than efforts focusing on cross-selling and up-selling to current customers.

Question 14

The vast majority of CRM effectiveness measures can be grouped into four important and distinct areas: customer cycle measures, company 3E measures, customer and company worth measures, and competitive strength measures.

Question 15

Some useful measures of customer acquisition effectiveness include size of wallet, share of wallet, and share of category.

Question 16

Company "3E" CRM effectiveness measures consist of company efficiency, effectiveness and employee behavior.

Question 17

When using a 5 point rating scale to measure customer satisfaction (where a "5" denotes highest satisfaction) it is perhaps more important for companies to move customers from 2 and 3 levels to a 4 as it is to move customers at a 4 to level 5.

Question 18

Xerox found that customer who rated their services a "4" were almost as likely to repurchase Xerox products over the next 18 months as those who rated their service a "5".

Question 19

SERVQUAL is a 22 item instrument for assessing customer perceptions of service quality.

Question 20

The acquisition, yield and capture rates are all the same; namely, the number of prospects acquired divided by the total number targeted.

Question 21

The maintenance ration is the cost involved in maintaining customer relationships divided by total CRM expenditures.

Question 22

Computing share of category is similar to computing share of wallet except share of category is based on volume or frequency of purchase as opposed to value.

Question 23

Of 100,000 Macy customers active in 2005, 80,000 are still active in 2006. The average lifetime duration is therefore 80%.

Question 24

The survival rate is the number of customers remaining between the formation of a cohort and any point in time afterward.

Question 25

Customer equity can be defined as the sum of CLVs of all the company's individual customers less company expenditures discounted to a net present value.

Question 26

Which of the following is NOT true regarding CLV?

A)it looks forward and not backward regarding customers' value
B)it includes all of the elements that drive profitability
C)it focuses on the product as the drive of profitability
D)it can be used to include the value of prospects
E)all of the above are true

Question 27

Which of the following is false regarding "return on relationships"?

A)it is the long term net financial outcome caused by the establishment and maintenance of an organization's network of relationships
B)it includes accounting approaches pertinent to a company's marketing efforts
C)it focuses on the company-customer relationship
D)it is similar to customer equity measures
E)it pertains to a company's marketing efforts to customers, suppliers, and even channel members

Question 28

The most important marketing lever in driving firm value is

A)customer acquisition.
B)customer retention.
C)return on relationships.
D)customer equity.
E)the 4Ps.

Question 29

Which of the following is NOT a brand equity asset according to David Aaker?

A)brand name awareness
B)hierarchy of effects
C)perceived brand quality
D)brand Image
E)all of the above are brand equity assets

Question 30

The customer CRM strategy cycle does NOT include which of the following?

A)acquisition
B)retention
C)development
D)winback
E)flanking

Question 31

There are four separate areas that should contain CRM effectiveness measures, excluding which of the following?

A)customer CRM strategy cycle
B)competitive measures
C)company measures
D)customer lifetime value and customer equity measures
E)marketing research and customer knowledge measures

Question 32

Customer information is gathered through a variety of techniques EXCEPT for which of the following?

A)ethnographic studies
B)delphi forecasts
C)simple observation
D)longitudinal studies
E)critical incident scores

Question 33

A simple but effective way to measure customer satisfaction is to

A)get ratings on the ideal, on the experience, and simply compute the difference.
B)ask consumers if the product or service was above, below, or about what was expected.
C)use conjoint analysis.
D)use computer simulation.
E)employ management by walking around (MBWA)

Question 34

The best way to measure satisfaction is to use which of the following?

A)service quality gap measures
B)a direct measure: merely ask if the service was better, worse or about what was expected
C)a transaction specific measure
D)a cumulative satisfaction score
E)none of the above

Question 35

If one wants to measure a customer's satisfaction with the service received from a hotel check-in representative, the best way to do it is through

A)an overall satisfaction measure.
B)a cumulative satisfaction measure.
C)a transaction specific measure.
D)a longitudinal study.
E)ethnographic research.

Question 36

If one wants to measure the effectiveness of customer retention efforts, the best way to do it is through

A)transaction specific research.
B)ethnographic research.
C)cumulative satisfaction measures.
D)critical incident scoring.
E)RFM modeling.

Question 37

Which company will have the best financial outcome according to Reichheld?

A)those with loyal customers
B)those with lowest unit cost
C)those with highest market share
D)those with highest satisfaction levels
E)those with best economies of scale

Question 38

Which of the following is NOT true?

A)Many or most heavy users are multibrand loyal.
B)The most profitable customer is likely to be your competitor's most profitable customer.
C)100% loyal buyers of a brand tend to be light buyers.
D)Customers who have divided loyalty may be more profitable than those who are 100% loyal.
E)all are true

Question 39

SERVQUAL is

A)a measure of a customer contact person's qualifications.
B)the first test to measure customer contact person's knowledge regarding customer interactions.
C)a 22-item instrument for assessing customer perceptions of the quality of service they receive from an organization.
D)GE's approach to determining bonuses for its sales agents.
E)the investment industries first attempt to rate companies based on the quality of their service.

Question 40

Defection curves

A)depict the relationship between satisfaction and retention.
B)depict the relationship between company profits and changes in customer defection rates.
C)depict the relationship between types of contractual organizations and their retention rates.
D)allow companies to rate each element of service and its importance to customers.
E)rank service attributes in order of importance in gaining and losing customers.

Question 41

A specific aspect of service, or a single behavior or characteristic of the service or product, which is used to measure service quality, is referred to as

A)an acquisition/defection matrix.
B)hierarchy of effects mode.
C)idiosyncratic fit heuristic.
D)critical Incident Analysis.
E)event-history score.

Question 42

An acquisition/defection matrix indicates

A)who a company is losing their customers to and gaining them from.
B)the relationship between satisfaction scores and retention.
C)none of the above
D)which type of customer is entering and leaving.
E)which VAN members are short vs. long term.

Question 43

Hierarchy of Effect Model consists of

A)awareness, interest, desire, and action.
B)cause, effect, appraisal.
C)awareness, knowledge, liking, preferences, intention, behavior.
D)problem recognition, information search, decision making, and post-purchase evaluation.
E)none of the above

Question 44

The Event-History Model is a

A)simulation determining the impact of the 4Ps on purchase.
B)typology of the critical incidents involved in a customer's relationship with a company.
C)formula that predicts the probability that the customer is still active in the future.
D)model forecasting the impact of exogenous variables on a company's profits.
E)model depicting sales curves around key holidays.

Question 45

Which of the following is NOT a direct measure of the positive impact of CRM?

A)business process efficiencies
B)cost reductions
C)improvements in acquisition and retention
D)share of stomach
E)aggregate market share

Question 46

Useful measures of customer acquisition do NOT include which of the following?

A)yield rate
B)capture rate
C)share of category
D)conversion rate
E)conversion efficiency

Question 47

Useful measures of the effectiveness of cross-selling and up-selling do NOT include which of the following?

A)size of wallet
B)share of wallet
C)share of category
D)purchase cycle time
E)maintenance ration

Question 48

Company 3E measures of CRM effectiveness include

A)enterprise cost/benefit analysis.
B)ERP cost savings.
C)elasticity demand curves.
D)employee behavior.
E)A, B and C

Question 49

Customer and company worth measures of CRM effectiveness include

A)CLV.
B)SERVQUAL.
C)stock indicators.
D)regain measures.
E)all are measures

Question 50

When measuring satisfaction, it is important to differentiate among

A)first-time buyers, short-term buyers, long-term buyers, and those about to defect.
B)men and women.
C)B2B vs. B2C.
D)geographic market segments.
E)all of the above

Question 51

SERVQUAL relates to the five dimensions that customers use in assessing service quality. These do NOT include which of the following?

A)tangibles
B)empathy
C)reliability
D)validity
E)responsiveness

Question 52

If an airline sent out 1 million promotional pieces that resulted in 50,000 new customers, the acquisition rate is

A)the same as the yield rate.
B)the same as the capture rate.
C)the same as the conversion rate.
D)5%.
E)All of the above

Question 53

Share of category is based on which of the following?

A)value
B)dollar value
C)purchases of all family members
D)volume or frequency of purchase
E)none of the above

Question 54

Of 100,000 customers who were active in the year 2005, only 60,000 are still active in 2006. What would the average retention rate be?

A)It cannot be determined because the initial 100,000 have not been segmented into cohorts.
B)0.4
C)0.54
D)0.6
E)None of the above

Question 55

Defection indicators would NOT include which of the following?

A)days since last purchase
B). share of wallet changes
C)yield rate
D)measures of downward migration
E)all are defection indicators

Question 56

Company 3E measures would NOT include which of the following?

A)first contact resolution
B)revenue per CRM dollar
C)time to resolution
D)time spent in generating targeted promotions
E)all are 3E measures

Question 57

Customer Equity is the CLV

A)of all the company's individual customers.
B)of all the company's customers less company expenditures.
C)of all the company's customers less company expenditures discounted to a net present value.
D)plus brand equity.
E)plus brand value.

Question 58

The drivers of value equity are

A)the 4Ps.
B)price, quality, and convenience.
C)brand image.
D)CLV.
E)all of the above are drivers of value equity

Question 59

The drivers of brand equity are

A)the 4Ps.
B)brand image.
C)ethnological data.
D)cognitive and affective components.
E)conative components.

Question 60

The drivers of relationship equity are

A)satisfaction.
B)the 4Ps.
C)company image.
D)brand value.
E)loyalty and commitment.

Question 61

Customer's Experience Cycle involves

A)satisfaction with the extended product.
B)loyalty and commitment.
C)satisfaction with Web site, field sales staff, service, CCC, etc.
D)critical incident analysis.
E)all of the above

Question 62

The major benefit of the Event History Model is

A)knowing the consumer's buying history.
B)understanding which events trigger purchase.
C)in preventing over-investment in inactive customers.
D)understanding what caused consumers to defect.
E)all of the above are benefits

Question 63

Measuring consumer behavior over time is best done through which of the following?

A)cross-sectional data collection
B)human observation
C)interaction scores
D)longitudinal data collection
E)critical incident scores

Question 64

Critical incident analysis

A)focuses on a consumer's holistic feelings toward the organization.
B)provides the prime reason for purchase at that time.
C)is built upon specific items or a single behavior.
D)is the basis for brand extension.
E)is understanding what prompted the suggestion to purchase.

Question 65

In the RFM approach

A)customers are given points based on reaction and fulfillment of mass-media couponing.
B)significant over-investment is made on lapsed customers.
C)pacing of purchase is taken into account.
D)customers are rated on revenue, funds, and monetary value.
E)B2B sales are rank ordered.