Question 1

Why do firms benefit from a price premium with loyal customers?

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Question 2

Which of the following is NOT an example of common CRM applications?
A) Data collection
B) Data analysis
C) Market reinvestment
D) Sales force automation
E) Call center automation

Accepted Answer

Data collection, data analysis, sales force automation, and call center automation are all common CRM applications. Market reinvestment is not typically considered a CRM application.

Question 3

Define loyalty in a service context.

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Question 4

Vanguard Group is very careful about acquiring the right type of customer.

Accepted Answer

Vanguard Group is known for its strict selection process when it comes to acquiring clients. They tend to focus on individuals or organizations with a long-term investment strategy and a willingness to adhere to their low-cost index fund approach. Vanguard also prioritizes a client's financial stability and readiness to invest, as they aim to provide personalized investment solutions that align with their clients' goals.

Question 5

Give an example of a firm discussed in the chapter that successfully built a strategy on serving customer segments that were neglected by established players that didn't perceive them as sufficiently "valuable."

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Question 6

Describe how Vanguard Group keeps its costs down to attract the right type of customer.

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Question 7

ING Direct could be called the fast-food model of consumer banking because it is about as no-frills as it gets.

Accepted Answer

ING Direct is known for its minimalist, no-fee approach to banking, similar to the fast-food industry's emphasis on efficiency and simplicity.

Question 8

Customer satisfaction (based on the ACSI) is highly related to the stock price of individual firms.

Accepted Answer

Studies have shown that companies with higher customer satisfaction ratings (as measured by the American Customer Satisfaction Index, or ACSI) tend to have higher stock prices over time.

Question 9

Vanguard's success is measured by which of the following?
A) Low redemption rates
B) High redemption rates
C) Low customer turnover
D) High customer turnover
E) Portfolio stability

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Question 10

Describe the wheel of loyalty.

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Question 11

Which of the following is an example of a service that involves continuous delivery without a formal relationship?
A) Police protection
B) Movie theater
C) Restaurant
D) Banking
E) Insurance

Accepted Answer

Police protection is an example of a service that involves continuous delivery without a formal relationship. The police provide their services to the public at all times, without a formal contract or agreement with individual citizens. The other options listed, such as movie theaters, restaurants, banking, and insurance, all typically involve a formal transaction or relationship between the service provider and customer.

Question 12

Explain what a "structural bond" means.

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Question 13

Discuss the framework of the five key processes involved in a CRM strategy.

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Question 14

DHL's less powerful accounts generate significantly lower profitability than their major accounts.

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Question 15

Part of British Airways' strategy is that customers can earn BA points and air miles on other airlines.

Accepted Answer

This is correct. British Airways is a member of the oneworld alliance and has partnerships with other airlines, allowing customers to earn and redeem BA points and air miles on those airlines.

Question 16

What are the two questions that need to be asked when analyzing the nature of a current relationship?

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Question 17

Which of the following is an example of a service that involves discrete transactions within a membership context?
A) Repair under warranty
B) Insurance
C) Radio station
D) Car rental
E) Pay phone

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Question 18

Which of the following is NOT an aspect of ING Direct's no-frills strategy?
A) High interest rates
B) Offers only a handful of basic products
C) Lures low-maintenance customers
D) Firing customers who don't fit the profile
E) Increased contact with the bank

Accepted Answer

ING Direct's no-frills strategy focuses on simplicity and efficiency, offering high interest rates, a limited product range, and targeting low-maintenance customers. It does not emphasize increased contact with the bank; rather, it aims to minimize operational costs and complexities.

Question 19

Describe the "Iron" customer segment discussed by Zeithaml, Rust, and Lemon.

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Question 20

Define total relationship marketing.

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Quiz 12: Managing Relationships and Building Loyalty