Deck 5: Differentiating Customers by Value: Some Customers Are Worth More Than Others

Question 1

The two fundamental differences between customers are:

A) behaviors and attitudes
B) value and needs
C) behaviors and value
D) demographics and attitudes

Answer 1

value and needs

Question 2

Once we identify customers, a customer-strategy enterprise will differentiate them in order to:

A) treat different customers differently
B) increase customers' actual value and decrease potential value
C) get an exact measurement of customers' LTV
D) acquire as many new customers as possible

Answer 2

treat different customers differently

Question 3

The value a customer could create for the enterprise, if the enterprise made the right offerings at the right time, is:

A) actual value
B) potential value
C) short-term value
D) long-term value

Answer 3

potential value

Question 4

A customer's value to the enterprise is a function of the profit the customer generates:

A) in the past
B) in the present
C) in the future
D) all of the above

Question 5

The net present value of the expected future stream of financial contributions for the customer is:

A) customer lifetime value
B) actual value
C) long-term value
D) potential value

Question 6

A customer's contributions to an enterprise could include the following except:

A) product purchases
B) service contracts
C) using an online service rather than a call center
D) word-of-mouth referrals

Question 7

The pharmaceutical industry discovered high referral value in:

A) key opinion leaders
B) public sector employees
C) college students
D) clients in financial distress

Question 8

From the customer's perspective, potential value depends upon:

A) current product or service offering
B) customer behavior
C) customer trajectory
D) customer need

Question 9

From the enterprise's perspective, unrealized potential value depends upon all of the following except:

A) business with competitor
B) additional relevant product lines
C) referrals
D) current product or service usage

Question 10

According to the Pareto principle:

A) 80% of customers produce 20% of the company's business.
B) Customer value is best represented by a bell curve.
C) Customer value is best represented by a log-normal distribution curve.
D) The differences in customer value are similar to the differences in human height.

Question 11

RFM (recency, frequency, and monetary value) is a useful proxy for:

A) actual value
B) potential value
C) long-term value
D) customer lifetime value

Question 12

The goal of value differentiation is:

A) historical understanding
B) measuring customer lifetime value
C) a predictive plan of action
D) increasing actual value

Question 13

The customer-strategy enterprise will focus on growing the following customer value categories:

A) MVC and BZs
B) MVC and MGC
C) low-maintenance customers and MVC
D) super-growth customers and MGC

Question 14

Define the following ways of measuring customer value: actual value, unrealized potential value, current/short-term value, long-term value, and customer lifetime value. How do these different measurements relate to each other, where do they overlap, and how do they differ?

Question 15

How do "super-growth customers" present both pitfall and promise to a customer-strategy enterprise? Describe four strategies a company could profitably apply to dealing with these tough customers.

Question 16

Consider the five customer value categories discussed in the chapter. To maintain an ideal mix of customers, what strategy should a company apply to each category?

Question 17

Under what conditions should a customer-strategy enterprise consider firing an unprofitable customer? Describe a scenario in which this is done well.