Studies have shown that small reductions in customer defections produce significant increases in profits because of all of the following reasons except:
A) loyal customers buy more products.
B) loyal customers are less price-sensitive.
C) loyal customers pay less attention to competitors' advertising.
D) loyal customers will not mind paying higher prices than new customers.

Question

Quizplus · Accepted Answer

This statement is false. Loyal customers may be willing to pay a premium for quality and service, but they will still compare prices to ensure they are getting fair value. In fact, many companies offer loyalty programs and discounts to retain their existing customers and encourage repeat business. Therefore, loyal customers may be more price-sensitive than new customers if they feel they are not getting the best deal.

Studies Have Shown That Small Reductions in Customer Defections Produce