Question 1

A ________ 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.

Accepted Answer

A profitable customer generates revenue that exceeds the company's cost of acquiring, selling to, and servicing that customer over time. A semi-profitable customer may generate revenue but not enough to cover the cost stream. A target customer is the intended audience for a marketing campaign. A niche customer is a highly specialized customer base. An unprofitable customer generates revenue that is less than the cost of acquiring, selling to, and servicing that customer. The question specifically asks for a customer that yields a revenue stream that exceeds the cost stream by an acceptable amount, which is a profitable customer.

Question 2

After conducting customer profitability analysis (CPA), Sunquest Vacations would likely decide to curtail any resources and activities directed at ________ customers, those seen as the most unprofitable and undesirable.

Accepted Answer

Customer profitability analysis (CPA) helps a company to identify its most profitable and unprofitable customers. If a company like Sunquest Vacations conducts CPA, it would decide to restrict its resources and activities for losing customers, as they are the least profitable and undesirable. The company may choose to focus on its profitable, loyal, and satisfied customers instead.

Question 3

A survey performed by Canadian Business magazine found that the biggest gap between best and worst customer satisfaction levels occurred in the

Accepted Answer

According to the survey performed by Canadian Business magazine, the biggest gap between best and worst customer satisfaction levels occurred in the airline industry. This indicates that there is a significant difference between the level of customer satisfaction provided by the best and worst airlines in the industry.

Question 4

________ is the totality of features and characteristics of a product or service that bear on its ability to satisfy stated or implied needs.

Accepted Answer

Quality is defined as the totality of features and characteristics of a product or service that bear on its ability to satisfy stated or implied needs. Performance, customer loyalty, value, and customer retention are all related to quality but are not comprehensive enough to encompass all features and characteristics related to satisfying customer needs.

Question 5

Which of the following is the best example of what is called a leverageable advantage?

Accepted Answer

Microsoft's use of its operating system to supply networking applications is a leverageable advantage because it allows them to cross-sell their products and dominate multiple markets.

Question 6

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

Accepted Answer

Customer relationship management relies on individual account information to track customer interactions, preferences, and purchase history in real-time, allowing companies to personalize and improve their customer service. While market research, demographic trend data, and survey data from defected customers can inform broader customer service strategies, they do not provide the same level of real-time insights as individual account information. Reports from mystery shoppers may also be useful for identifying gaps in customer service, but they do not provide the same level of data as individual account information.

Question 7

________ is the process of carefully managing detailed information about individual customers and all customer "touch points" to maximize loyalty.

Accepted Answer

Customer relationship management (CRM) is the process of managing detailed information about individual customers and all customer touchpoints to maximize loyalty. It involves using data analysis about customers' history with a company to improve business relationships with customers, specifically focusing on customer retention and ultimately driving sales growth. CRM systems typically provide companies with a suite of tools and techniques to help manage their customer interactions throughout the entire lifecycle of the customer, from prospect to sale to customer support and beyond.

Question 8

________ is an organization-wide approach to continuously improving the quality of all the organization's processes, products, and services.

Accepted Answer

Total quality management (TQM) is a comprehensive approach to improving the quality of all processes, products, and services within an organization. TQM involves everyone in the organization working together to improve quality and continuously exceed customer expectations. It focuses on improving processes and reducing waste, defects, and errors, which ultimately leads to increased customer satisfaction, loyalty, and profitability. TQM principles include customer focus, continuous improvement, employee involvement and empowerment, leadership, and data-driven decision making.

Question 9

According to research done by American Express, the best customers outspend those that are considered to be the best customers by significant margins. Holt Renfrew, an upscale retailer, would likely find their best customers outspend other customers by a ratio of

Accepted Answer

While the question only provides information about American Express research, it is reasonable to assume that similar patterns would hold true for other upscale retailers like Holt Renfrew. The answer options range from 4 to 16 to 1, and since the question suggests a "significant margin," options A and E can be eliminated. Option B seems too extreme, as a 13 to 1 ratio is quite large. Option C (12 to 1) is a possibility, although it may not represent a large enough margin to be considered "significant." Therefore, the best answer is D (16 to 1), which provides the largest ratio and a significant margin between the best and other customers.

Question 10

The 20-80-30 rules reflects the idea that

Accepted Answer

The 20-80-30 rule states that the top 20 percent of customers are responsible for generating 80 percent of a company's profits, and the bottom 30 percent of customers are unprofitable. It highlights the importance of focusing on the most profitable customers and minimizing expenses related to serving unprofitable ones.

Question 11

The drive in world markets to produce superior goods has led some countries to recognize or award prizes. What is the name of Japan's prize for developing quality products?

Accepted Answer

Japan's prize for developing quality products is called the Deming Prize, named after W. Edwards Deming, who is recognized as one of the pioneers in the field of quality management.

Question 12

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

Accepted Answer

Activity-Based Costing (ABC) is the most appropriate accounting technique to conduct customer profitability analysis (CPA) as it traces the costs of activities and processes required to serve specific customers or customer groups. ABC helps in identifying and allocating the costs of resources used to serve customers, which is crucial to understand customer profitability.

Question 13

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

Accepted Answer

Midsize customers are often the most profitable because they have significant service expectations and are willing to pay nearly full price, unlike larger customers who may demand discounts or smaller customers who may not purchase in large volumes.

Question 14

________ can track customer satisfaction directly and ask additional questions to measure repurchase intention and the respondent's likelihood or willingness to recommend the company and brand to others.

Accepted Answer

Periodic surveys can directly track customer satisfaction and also ask follow-up questions to measure repurchase intention and willingness to recommend the company and brand to others. Mystery shoppers, customer loss rates, customer focus statements, and sales summary reports may provide some information on customer satisfaction, but they do not directly measure it or provide additional insight into repurchase intention or willingness to recommend.

Question 15

If Loblaws hired staff to pose as potential buyers and report on strong and weak points experienced in buying the company's and competitors' products, they would be engaging in which satisfaction measurement strategy?

Accepted Answer

The strategy described in the question is that of mystery shopping, where employees pose as customers to gather information about the products and services offered by the company and its competitors. This approach can provide valuable insights into the customer experience and allow companies to identify areas for improvement.

Question 16

________ can be defined as a deeply held commitment to rebuy or repatronize a preferred product or service in the future despite situational influences and marketing efforts having the potential to cause switching behavior.

Accepted Answer

The given definition fits the concept of customer loyalty, which refers to the tendency of customers to continue doing business with a brand or company over time, even when better pricing, convenience, or product features are available from competitors. Loyalty reflects the customer's emotional attachment as well as perceived value and trust in the brand, and is typically influenced by multiple factors beyond mere satisfaction or utilitarian benefits.

Question 17

________ is the practice of marketing to consumers only after gaining their expressed permission.

Accepted Answer

Permission marketing involves obtaining consent from customers before sending them marketing messages or offering them promotions. This can be in the form of opt-in email lists, text message subscriptions, or other methods where customers actively choose to receive communication from the brand. By using permission marketing, businesses can target a more engaged audience who is more likely to be receptive to their messages and offerings.

Question 18

The best survey method to measure customer satisfaction directly is

Accepted Answer

Periodic surveys directly measure customer satisfaction and provide valuable feedback to the business. The other options indirectly measure customer satisfaction or measure different aspects of customer behavior.

Question 19

One key to customer retention is ________. It would be wise for a company to measure this factor frequently.

Accepted Answer

Customer satisfaction is a key factor in retaining customers. If customers are satisfied with a company's products or services, they are more likely to continue doing business with that company. It is important for companies to measure customer satisfaction frequently through surveys, feedback forms, and other means, in order to identify areas where they can improve and address any issues before they result in lost customers. Having an ethics officer or customers on the board of directors may also contribute to customer retention indirectly, but they are not directly related to measuring or improving customer satisfaction. Deep discounts for intermediaries or heavy promotion may attract new customers, but they do not necessarily ensure that those customers will remain loyal over time.

Question 20

Of customers who register a complaint, ________.

Accepted Answer

Some customers who register a complaint may be willing to do business with the company again if their complaint is resolved to their satisfaction. However, this is not guaranteed for all customers who complain.

Quiz 5: Creating Long term Loyalty Relationships