Deck 10: Customer Relationship Management

Question 1

Effective frequent-shopper programs are transparent.

Answer 1

True
Effective programs are transparent in that they make it easy for customers to keep track of their spending and available rewards.

Question 2

Cookies are not equipped to track customer interactions on social networking sites.

Answer 2

False
Cookies can enable the collection of data about what pages people have viewed, other sites the people have visited, how they spend money online, and their interactions on social networking sites.

Question 3

The objective of the CRM process is to

A) analyze market trends.
B) expand services.
C) develop loyalty and repeat-purchase behavior.
D) extend hours of operations.
E) monitor customer transactions.

Answer 3

C
The objective of the CRM process is to develop loyalty and repeat purchase behavior among a retailer's best customers. Customer loyalty is more than having customers satisfied with a retailer and making repeat visits.

Question 4

Frequent-shopper programs are expensive to implement and manage.

Question 5

Retailers will use all of the following to retain and increase share of wallet from their best customers except:

A) Frequent-shopper programs
B) Special customer services
C) Personalization
D) Promotions
E) Lower prices

Question 6

What is the final step in the CRM process?

A) Analyzing data
B) Developing CRM programs
C) Constructing a data warehouse
D) Identifying the target customers
E) Implementing programs

Question 7

Which of the following statements does not describe the customer relationship management process that retailers implement?

A) The process begins with the collection and analysis of data about a retailer's customers and the identification of its best customers.
B) CRM is an iterative process that turns customer data into customer loyalty and repeat-purchase behavior.
C) Retailers concentrate on providing more value to their best customers using targeted promotions.
D) Loyal customers share a personal bond with retailers.
E) All of these statements describe customer relationship management.

Question 8

A business philosophy and set of strategies, programs, and systems that focuses upon identifying and building loyalty with a retailer's most valued customers is called

A) customer loyalty management.
B) strategic relationship management.
C) most valued customer management.
D) strategic consumer management.
E) customer relationship management.

Question 9

A specific type of data analysis that focuses on the composition of the bundle of merchandise purchased by a consumer during a single shopping trip is called a market basket analysis.

Question 10

Developing retail programs for small groups or individual customers is referred to as 1-to-1 retailing.

Question 11

The customer lifetime value (CLV) is the expected contribution from the customer to the retailer's profits over his or her entire relationship with the retailer.

Question 12

Which of the following statements is True of customer loyalty?

A) It refers to customers making repeat visits to a retailer and being satisfied with their experiences.
B) It occurs when customers purchase merchandise and services from a retailer because of its convenient location.
C) It is an emotional connection between a retailer and a customer.
D) It is the state of accumulated transactions that customers build through repeat purchases responding to various promotions.
E) It is the sole result of superior customer service.

Question 13

Customer loyalty is limited to ensuring satisfaction by offering a wide assortment of products.

Question 14

________ refers to the percentage of the customers' purchases made from the retailer.

A) 80-20 rule
B) Share of wallet
C) Customer lifetime value
D) Profit sharing
E) 1-to-1 retailing

Question 15

What is the primary objective of CRM process?

A) To develop a base of loyal customers who patronize the retailer frequently
B) To satisfy customers by providing discounts and special offers
C) To increase the foot-traffic into retail stores
D) To offer the best prices possible to their target customer
E) To attract customers away from competitors

Question 16

A data warehouse normally contains information on customer preferences.

Question 17

________ indicates that customers are committed to purchasing merchandise and services from the retailer regardless of competing retailers' enticements.

A) Customer commitment
B) Customer loyalty
C) Customer satisfaction
D) Customer attitudes
E) Customer interest

Question 18

Customer loyalty can be enhanced by creating an appealing brand image.

Question 19

Customers in the platinum segment place more value on the price of a product.

Question 20

Customer loyalty means

A) customers are committed to purchasing from the retailer and will seldom shop at competing stores.
B) customers have a high frequency of purchasing merchandise from the retailer.
C) customers have most recently shopped and purchased from the retailer.
D) customers make the highest amount of their purchases at one retailer and will be loyal to that retailer.
E) customers have positive emotions about a retailer and will be loyal to that retailer.

Question 21

When customers join the Daily Needs Reward Zone, they receive one point on every purchase they make at Daily Needs stores and DailyNeeds.com. Reward Zone points are converted to reward certificates which can be redeemed for merchandise at Daily Needs stores or on DailyNeeds.com. Reward Zone Members also receive exclusive offers throughout the year and a "special reward" for their birthday. This strategy by Daily Needs is an example of

A) a tiered reward system.
B) personalization.
C) a customer loyalty program.
D) an exclusive value share program.
E) market basket analysis.

Question 22

Airlines and credit cards that offer points for each dollar spent are utilizing ________ for effective customer relationship management.

A) a loyalty program
B) cookies
C) share of wallet
D) market baskets
E) communities

Question 23

When Lana went to Bookdreams.com to look for books on health and wellness, she saw a personalized greeting and book recommendations. The greeting and books recommendations were based on her previous visits to the site. Which of the following best describes how Bookdreams.com knew that Lana has accessed their site?

A) Bookdreams.com used retail analytics to create a personalized offer.
B) The site used the 80-20 scheme to analyze her buying behavior.
C) The site used market basket analysis to predict her buying patterns.
D) Another retailer sold her private information to Bookdreams.com.
E) Bookdreams.com placed cookies on her computer to identify her.

Question 24

At La Rue Fashions, there is a certain customer who makes large purchases every Friday and returns everything two weeks later. In response, the manager recently created a policy and published it. It included specifics of the store's terms regarding returned merchandise stating that all tags must be intact; the clothing must not have been worn; and it must be returned within seven days to receive credit. Which of the following best describes the retailer's actions?

A) Add-on selling
B) Getting the lead out
C) Data mining
D) RFM analysis
E) Cutting off services

Question 25

Although having information about individual customers helps retailers provide better services to consumers, consumers are concerned about

A) price promotions.
B) loyalty.
C) descriptive information.
D) privacy.
E) data mining.

Question 26

Which of the following principles forming the basis of a new legislation on consumer privacy encourages retailers to treat consumer privacy as their default setting?

A) Simplified consumer choice
B) Data mining
C) Privacy by design
D) Greater transparency
E) Opt-in agreements

Question 27

When Mary purchased some caulk for her windows at Home Depot, the cashier asked for her telephone number at the point-of-sale. What was the retailer doing by asking this question?

A) The retailer was determining her level of trust in the store.
B) The retailer was identifying her preference.
C) The retailer was collecting data for the store's database.
D) The retailer was curious as to how many people from that area code shopped the store.
E) The retailer was confirming forecasts for buyers.

Question 28

Which of the following is an inherent limitation associated with asking the customer for identifying information for building a data warehouse?

A) Some customers may feel that the sales associate is violating their privacy.
B) Some identifying information is illegal to use for marketing purposes.
C) If the information provided is inaccurate, the retailer may be held liable.
D) Customer consent is mandatory in the U.S. for using personal information.
E) Customers may give more information than what the sales associate can record.

Question 29

When consumers explicitly tell the retailer not to use their personal information, they must

A) choosing/consenting.
B) opt in.
C) opt out.
D) declining public domain statutes.
E) notifying consumer information services.

Question 30

Why is constructing a data warehouse more difficult for in-store transactions than it is for online shopping?

A) Customer returns to the store confound the data.
B) Store purchases can be made with cash or third-party credit cards.
C) Availability of store assortments is not always similar to website assortments.
D) Store customers are not interested in sharing personal information.
E) Since customers are more likely to buy gifts for others in stores than online, it defeats the purpose of understanding the end-user.

Question 31

Which of the following is a reason for consumers to have privacy concerns regarding cookies?

A) Customers cannot realize the amount of information being collected without their knowledge.
B) The passwords used to access websites reveal a large amount of personal information without a customer's knowledge.
C) The cookies block the ability to log on to certain sites.
D) Governmental agencies may use cookies to collect extra taxes.
E) The cookies may corrupt the consumers' personal software files.

Question 32

When consumers explicitly agree to share personal information, the agreement is referred to as

A) participatory knowledge.
B) opt in.
C) the 80-20 rule.
D) a disclosure agreement.
E) opt out.

Question 33

Which of the following statements is not True of frequent-shopper programs?

A) Frequent-shopper programs are programs that identify and provide rewards to customers who patronize a retailer.
B) Frequent-shopper programs are also commonly called loyalty programs.
C) Frequent-shopper cards are issued on the basis of market basket analysis.
D) Frequent-shopper programs include a private-label credit card offered by a retailer.
E) Frequent-shopper programs can provide customer information automatically to the retailer when customers have their program card scanned at the time of transaction.

Question 34

Which of the following information does not form a part of the data warehouse for a retailer?

A) Details of customer visits to the retailer's site
B) A complete history of the customer's transactions
C) Customer preferences such as brands and fabrics
D) Demographic data for segmentation purposes
E) Details of competitor patronization

Question 35

The first step in the CRM process is

A) analyzing data.
B) creating a data warehouse.
C) developing CRM programs.
D) implementing programs.
E) rewarding loyal customers.

Question 36

Which of the following describes an approach that is used to deal with unprofitable customers?

A) Retailers charging a restocking fee for returned merchandise
B) Retailers offering frequent buyer cards
C) Supermarkets giving away free samples of a new product
D) Retailers having special events outside of regular store hours
E) Retailers allowing certain merchandise to be viewed only by qualified customers

Question 37

Wilbur uses a Books-A-Million customer card, Kash-N-Karry customer card, Jerry's Cleaners customer card, and Sandwich Shop customer card when he shops at any of these retailers. Each time he uses them, he gets rewarded with reduced cost, free merchandise, or a credit. These cards form a part of

A) assortment planning programs.
B) retail analytic programs.
C) frequent-shopper programs.
D) privacy and CRM programs.
E) market basket analysis.

Question 38

Electronic retailers can collect transaction data for their data warehouse, but they can also collect information by placing cookies on a visitor's hard drive. Cookies are

A) viruses.
B) frequent-shopper rewards.
C) text files that identify pirated software.
D) files that identify visitors when they return to a website.
E) text files used exclusively to determine demographic information.

Question 39

A(n) ________ forms the foundation for all CRM activities.

A) frequent-shopper program
B) loyalty program
C) 1-to-1 retailing program
D) RFM analysis
E) data warehouse

Question 40

________ identify and provide rewards to customers who patronize a retailer.

A) Retail brand communities
B) Cookies
C) Loyalty programs
D) Customer surveys
E) Store advocates

Question 41

Which of the following statements is True of frequent-shopper programs?

A) Frequent-shopper programs are inexpensive to implement and manage.
B) It is easy to make changes in CRM programs.
C) It is clear that CRM programs increase customer spending and loyalty.
D) It is hard to gain competitive advantage with CRM as programs can be duplicated.
E) The advantages of frequent-shopper programs are unlimited.

Question 42

Millhouse loves books and often shops at a nearby Book Universe store. At the beginning of the year, he enrolled in a $5 program, and he would get a percentage off on the purchases he made throughout the year. Which of the following best demonstrates this type of approach toward customer retention?

A) Community
B) Sales promotion
C) Frequent-shopper program
D) Personalization
E) Special customer service

Question 43

Which of the following statements does not describe how retailers use a customer lifetime value (CLV)?

A) CLV is used to identify and cater to the best and more profitable customers.
B) CLV should be estimated under the assumption that the customer's future purchase behaviors will be the same as they have been in the past.
C) Sophisticated statistical methods are typically used to estimate the future contributions from past purchases.
D) An RFM analysis is often used by catalog retailers and direct marketers in estimating their customers' lifetime value.
E) A customer who spends $800 twice a year has a higher CLV than a customer that spends $100 each month.

Question 44

________ are applications of statistical techniques and models that seek to improve retail decisions through analyses of customer data.

A) Retail analytics
B) Redress analytics
C) Strategic analytics
D) Information drafts
E) Data clones

Question 45

What does the 80-20 rule mean?

A) 80% of the buying comes from 20% of the vendors.
B) 80% of the sales come from 20% markdowns.
C) 80% of the customers pay with 20% of their income.
D) 80% of the sales or profits come from 20% of the customers.
E) 80% of the merchandise is sold at 20% off.

Question 46

Since Yolanda used ________ to analyze what her customers often buy together during a single store visit, she knows to place facial tissues by the cold medicine and Wonder Bread by the Skippy Peanut Butter in her store.

A) market basket analysis
B) cookies
C) merchandising analysis
D) RFM analysis
E) location analysis

Question 47

What is customer alchemy?

A) Converting iron and gold customers into platinum customers
B) Offering more products to existing customers
C) Increasing the data collection from only platinum and gold customers
D) Creating a group of customers bound together by loyalty to a retailer
E) Tailoring loyalty programs to suit customers' needs

Question 48

Which of the following terms best describes the type of data analysis that focuses on the composition of products purchased by a customer during a single shopping trip?

A) Allotment analysis
B) Market basket analysis
C) Location analysis
D) Shopping cart analysis
E) Merchandising analysis

Question 49

Based on the following customer purchase data, which customer would have a higher lifetime value to the retailer?

A) Marcia
B) Jan
C) Cindy
D) Alice

Question 50

A way to achieve customer alchemy is through ________, which involves offering and selling more products and services to existing customers and increasing the retailer's share of wallet with these customers.

A) 1-to-1 retailing
B) add-on selling
C) personalizing
D) data mining
E) cross retailing

Question 51

Many products in a supermarket can be found in more than one place throughout the stores. What type of retail analytics technique is used to decide where to place products in a store?

A) Supermarket analysis
B) Market basket analysis
C) Location analysis
D) Shopping cart analysis
E) Merchandising analysis

Question 52

________ help in measuring a customer's CLV by using the data collected about customers.

A) Retail analytics
B) Risk analytics
C) Portfolio analyses
D) Biometrics
E) RFM analyses

Question 53

Which of the following statements is True of a tiered reward structure?

A) It provides an incentive for customers to consolidate their purchases with one retailer to reach the higher tiers.
B) It helps retailers determine which products customer purchases during a single shopping trip.
C) It uses software to discover new insights into the buying patterns of customers using large databases.
D) Customers belonging to the same tier form a retail brand community.
E) A tiered reward structure charges customers who use services.

Question 54

Which of the following statements correctly describes the practices regarding customer privacy in the U.S.?

A) In the U.S., Americans rely upon federal government to protect consumer privacy.
B) Current legislation in the U.S. for consumer privacy forces strict protection of consumer privacy in retailing.
C) The U.S. has more stringent consumer privacy laws than the European Union.
D) In the U.S., the opt-out policy is applied when consumers' personal information is collected and used.
E) In the U.S., personal information is generally viewed as being in the public domain, and retailers can use it in any way they desire.

Question 55

Which of the following statements is True of frequent-shopper programs?

A) They are highly beneficial for building long-term customer loyalty.
B) The discounts offered appeal mostly to price-conscious customers.
C) Customers are able to clearly differentiate the programs offered by different retailers.
D) Competitive advantages gained from these programs are sustainable.
E) Effective frequent-shopper programs are easy to develop.

Question 56

Why would the customer pyramid be more appropriate in identifying a customer's lifetime value than utilizing the traditional 80-20 rule?

A) The 80-20 rule doesn't recognize the behavior of 20 percent of the customers.
B) The 80-20 rule focuses only on the value of 80 percent of the shoppers.
C) Customers can more easily identify where they would be located in the customer pyramid than within the 80-20 rule.
D) If shoppers only buy 20 percent of the time, retailers have a missed sale 80 percent of the time.
E) The 80-20 rule does not consider important differences among the 80 percent of customers in the "rest" segment.

Question 57

If a U.S. retailer wants to conform to the European policies concerning how customer information is collected, which type of policy should it adopt?

A) Opt in
B) Opt out
C) Opt private
D) Opt EC
E) 80-20 rule

Question 58

Which of the following statements best describes a customer lifetime value (CLV)?

A) CLV is the value placed upon a retailer by a consumer.
B) CLV is a numerical value of how much a "best customer" shops.
C) CLV is what a customer contributes to a retailer's profits over his or her entire relationship with the retailer.
D) CLV is an assessment of how many valued customers shop with a retailer.
E) CLV is what retailers use to rate the value of guaranteed merchandise.

Question 59

Depending on the amount of money you have in Wachovia bank, you will receive a variety of different services. The lower-tiered customers are charged $7 to use a teller but can receive the same services for free if they use an ATM. Charging low-tiered customers for using live tellers is Wachovia's approach to

A) getting the lead out.
B) letting customers opt out.
C) tailoring offers for these customers.
D) soliciting feedback.
E) offering better services.

Question 60

Which of the following retail analytic applications involves the use of search techniques to gain insights into customers' buying patterns?

A) Factor analysis
B) Regression analysis
C) Data mining
D) Data scraping
E) Data cloning

Question 61

Which of the following statements is True of the gold segment members in the customer pyramid?

A) Price plays a greater role in their decision-making process.
B) The gold segment members place more value on customer service.
C) Their spending levels and profitability do not warrant special treatment.
D) They demand a lot of attention but buy very little from retailers.
E) This segment is composed of the customers with the top 25 percent CLVs.

Question 62

What are the factors affecting the degree to which consumers feel their privacy concerning personal information has been violated?

Question 63

What information does a data warehouse contain?

Question 64

Developing retail programs for small groups or individual customers is referred to as

A) cross selling.
B) a loyalty program.
C) a share of wallet program.
D) add-on selling.
E) 1-to-1 retailing.

Question 65

How can retailers enhance customer loyalty?

Question 66

Which of the following statements does not describe personalization implemented as a CRM program?

A) It overcomes a limitation of CRM strategies that treat all customers in a platinum segment as identical.
B) With the availability of customer-level data and analysis tools, retailers can now economically offer unique benefits and target messages to individual customers.
C) The Internet channel provides an opportunity for retailers to automate personalization and efficiently develop relationships similar to those that many small local retailers have with customers.
D) It helps retailers to convert their unprofitable customers in the lead segment in the customer pyramid to best customers.
E) The effective use of customer information in personalization programs creates the positive feedback cycle in the CRM process.

Question 67

What are the objectives of frequent-shopper programs?

Question 68

How is the customer pyramid more appropriate than the 80-20 rule when identifying customers?

Question 69

CRM programs directed toward customers in the high-value segment

A) offer more discounts.
B) are focused on maintaining loyalty.
C) give more importance to frequent-shopper programs.
D) attempt to discourage 20 percent of shoppers.
E) provide online shopping options without processing charges.

Question 70

Which of the following statements is True of the customer pyramid?

A) Customers in the iron segment need special attention from the retailer to grow their potential to be better customers.
B) All customers regardless of their segment must receive equitable promotional benefits.
C) Customers in the lead segment buy merchandise on sale or abuse return privileges.
D) Customers in the gold segment are the most profitable and loyal customers.
E) Customers in the platinum segment place little emphasis on customer service.

Question 71

Which of the following approaches toward retaining customers has retailers offering unique benefits and targeted messages to individuals?

A) Segmentation
B) Personalization
C) Frequent-shopper programs
D) Add-on selling
E) Community

Question 72

Describe approaches that retailers use in dealing with unprofitable customers.

Question 73

What are the four factors that limit the effectiveness of frequent-shopping programs?

Question 74

The release of the new Harry Potter book brought excitement in Enid's neighborhood. The local Book Universe store sold thousands of vouchers for the night of the release. The store invited Harry Potter enthusiasts to come for a party at the store that lasted until midnight when the book would be available for purchase. Book Universe developed a customer retention program based on

A) a market basket analysis.
B) creating a sense of community among its customers.
C) 1-to-1 retailing programs.
D) a tiered rewards program.
E) the concept of add-on selling offers for preferred customers.

Question 75

Describe practices that retailers use to convert good customers into their best customers.

Question 76

A ________ is a group of customers who are bound together by their loyalty to a retailer and the activities the retailer sponsors and undertakes.

A) frequent shopper community
B) retail brand community
C) consideration set
D) target market
E) customer pyramid

Question 77

What is market basket analysis, and when do retailers utilize it?

Question 78

In the customer pyramid, which of the following segments consists of customers with the top 25 percent CLVs?

A) Gold segment
B) Platinum segment
C) Iron segment
D) Lead segment
E) Silver segment

Question 79

The Bird of Paradise is one of the world's most attractive tropical flowers. When Josiah, who owns Joe's Flower Shop, knows he's receiving flowers from Hawaii, he emails all his customers whom he knows will like the flower and informs them of the expected shipment. Josiah's program is an example of

A) a frequent-shopper program.
B) a loyalty program.
C) gaining competitive advantage.
D) add-on selling.
E) 1-to-1 retailing.

Question 80

What is a customer lifetime value (CLV), and how is it estimated?