Deck 14: Customer Relationship Management

Question 1

Existing customers ________ than new customers.

A)are more critical about the quality of the product
B)cost less to serve
C)are more price-sensitive
D)are less likely to refer new customers to the company

Answer 1

B

Question 2

Which of the following statements is true regarding relationship customers?

A)Their loyalty to a supplier is based on price.
B)They are interested in a short-term relationship with the seller.
C)They are interested in the benefits of interdependency between the buyer and the seller.
D)They are interested only in the particular purchase at hand.

Answer 2

C

Question 3

Retained customers have been found to:

A)become more critical about the quality of the product over time.
B)increase their purchase quantities over time.
C)become highly price sensitive over time.
D)become more expensive to serve over time.

Answer 3

B

Question 4

Which of the following statements is true about customer interaction in packaged goods industry?

A)Customer interaction is direct and interaction frequency is high.
B)Customer interaction is direct and interaction frequency is low.
C)Customer interaction is indirect and interaction frequency is high.
D)Customer interaction is indirect and interaction frequency is low.

Question 5

Loyal customers are often more ________ than customers who need price inducements to switch or become a new customer.

A)price-sensitive
B)price-insensitive
C)critical about quality
D)expensive

Question 6

American Express asking its members to upgrade from Gold to Platinum card is an example of:

A)cross-selling.
B)reselling.
C)upselling.
D)mass selling.

Question 7

A back-of-the-envelope approach to calculating lifetime customer value (LCV)is a margin "multiple," which can be used to multiply the current margin generated by each customer to estimate the LCV.This multiple is shown by the formula: r/(1 + i + r).In this formula,"r" stands for:

A)retention rate for the product.
B)failure rate for the firm's products.
C)rate of return of the product by the customers.
D)the reliability of the product.

Question 8

Identify the correct statement about transaction buyers.

A)They are interested in a long-term relationship with the seller.
B)They are interested only in the particular purchase at hand.
C)These customers are interested in the benefits of interdependency between the buyer and the seller.
D)Their loyalty to a supplier is based on the value of maintaining a relationship with the supplier.

Question 9

________ profit is simply the profit margin a company earns from an average customer.

A)Supplementary
B)Base
C)Complementary
D)Variable

Question 10

Data mining refers to:

A)designing customer information file structure.
B)collecting customer data required to fill the customer information file.
C)entering the customer data in the customer information file.
D)analyzing a customer information file.

Question 11

Which of the following is most likely to be a part of customer relationship management (CRM)?

A)a team building activity within the organization
B)a training related to a new technology used in the organization for product development
C)an annual audit conducted in the company
D)maintaining telephone call centers for contact management

Question 12

Which of the following is one of the challenges to creating a customer database?

A)reluctant to share personal information
B)lack of availability of appropriate software to store customer data
C)expansion in the number of possible "touchpoints"
D)stringent laws against creating customer database

Question 13

Which of the following statements is true regarding a customer information file (CIF)?

A)It is considered as a key source of industry analysis.
B)It contains purchase history of customers.
C)It consists of a competitor database.
D)It consists of a supplier data base.

Question 14

Lifetime customer value is often described as the:

A)cost of customers switching to another brand.
B)present value of a stream of revenue that can be produced by a customer.
C)cost of acquiring the customer.
D)cost of retaining the customer.

Question 15

Many companies view their CIFs as a key source of:

A)marketing strategy.
B)competitor analysis.
C)competitive advantage.
D)supplier analysis.

Question 16

Which of the following statements is true regarding customer loyalty?

A)Loyal customers are more expensive to serve.
B)Loyal customers stimulate revenue growth.
C)Loyal customers are highly price sensitive.
D)Retained customers are less profitable than the switchers.

Question 17

Which of the following costs represent an initial cost for any customer?

A)development cost
B)membership cost
C)lifetime cost
D)acquisition cost

Question 18

Retained customers ________ than switchers.

A)are more expensive to serve
B)are more profitable
C)have lower lifetime customer value
D)are more price sensitive

Question 19

Which of the following information is contained in a customer information file (CIF)?

A)description of competitors
B)contact history of the customers
C)rates charged by key suppliers
D)rules and regulations affecting the business of the organization

Question 20

The core of a CRM program is a ________ database.

A)competitor
B)supplier
C)channel members'
D)customer

Question 21

Identify the customer who is most likely to spread negative word of mouth about your products.

A)Apostle
B)Mercenary
C)Laggard
D)Terrorist

Question 22

The basic customer satisfaction model is often called ________ because it presumes that levels of customer satisfaction with a product or service are determined by how well the product performs relative to what the customer expects.

A)a high confirmation/low confirmation model
B)an expectation confirmation/disconfirmation model
C)a negative confirmation/positive confirmation model
D)a need satisfying/dissatisfying model

Question 23

Which of the following will be included in the marketing cost?

A)cost of capital
B)research and development expenditure for a new product
C)cost of product samples
D)salaries of shop floor workers

Question 24

Which of the following best describes customers who tend to be dissatisfied or somewhere in the middle,switch to competitors,and are unhappy with you?

A)Loyalist/Apostle
B)Defector/Terrorist
C)Mercenary
D)Hostage

Question 25

A large amount of evidence indicates that merely satisfying customers:

A)is not enough to keep them loyal to your company or product.
B)leads to increased purchase by the customers over time.
C)attracts more customers through word of mouth.
D)allows you to reduce advertising expenditure over time.

Question 26

According to the text,the relationship between buyer and seller begins when:

A)the product is introduced in the market.
B)a customer enquires about the product.
C)the purchase is made.
D)the customer recommends the product to others.

Question 27

________ implies the companies are interested in managing the customer's interaction with the company at any number of different interaction points and using the feedback to improve products and processes.

A)Customer feedback management
B)Customer value management
C)Customer experience management
D)Customer expectation management

Question 28

Net Promoter is a metric introduced by Reichheld in his 2003 Harvard Business Review article "The One Number You Need to Grow." This metric indicates:

A)customer loyalty.
B)customer profitability.
C)product quality.
D)relative position of the organization in the industry.

Question 29

Which of the following are customers stuck with you and may be dissatisfied but they are highly loyal because there may not be a viable alternative?

A)Loyalists/Apostles
B)Defectors/Terrorists
C)Mercenaries
D)Hostages

Question 30

Which of the following is most likely to be a part of customer service?

A)obtaining feedback from the customers about the quality of the product
B)distributing free samples of product
C)repairing a product
D)providing discounts on the product

Question 31

________ and ________ can be highly satisfied but exhibit totally different loyalty patterns.

A)Apostles;Hostages
B)Defectors;Mercenaries
C)Apostles;Mercenaries
D)Mercenaries;Hostages

Question 32

Identify the customers who help you get new customers through referrals.

A)Terrorists
B)Mercenaries
C)Apostles
D)Hostages

Question 33

With reference to the "Net Promoter" customer loyalty metric,the "Net promoter score" is calculated by:

A)subtracting the percentage of passively satisfied customers from the percentage of promoters.
B)subtracting the percentage of detractors from the percentage of passively satisfied customers and then adding it to the percentage of promoters.
C)subtracting the percentage of detractors from the percentage of passively satisfied customers.
D)subtracting the percentage of detractors from the percentage of promoters.

Question 34

________ are customers who have high satisfaction but high switching rates as well.

A)Loyalists/Apostles
B)Defectors/Terrorists
C)Mercenaries
D)Hostages

Question 35

________ are customers who are completely satisfied,have high loyalty,and are very supportive of the company.

A)Loyalist/Apostle
B)Defector/Terrorist
C)Mercenary
D)Hostage

Question 36

Which of the following is most likely to be used for measuring customer satisfaction levels?

A)critical path method
B)five point scale
C)fishbone diagram
D)program evaluation and review technique

Question 37

LCV calculations are important for firms trying to calculate:

A)current profitability.
B)historic profit margins for the industry.
C)short-term profitability.
D)future profitability.

Question 38

The key to using customer service to develop long-term relationships is:

A)to provide services for free to all customers.
B)to view service as a way of differentiating your product.
C)to provide service only to loyal customers.
D)to make sure that your service is similar to that provided by the competitors.

Question 39

________ and ________ are both highly loyal,but for different reasons.

A)Apostles;Hostages
B)Defectors;Mercenaries
C)Apostles;Defectors
D)Mercenaries;Hostages

Question 40

A major benefit of the lifetime customer value (LCV)and profitability analyses is to permit the marketing manager to make informed decisions about:

A)which customers to target.
B)where to find new customers.
C)which customers to keep.
D)which competitors to avoid.

Question 41

The frequent-flyer programs offered by every major airline in the world are examples of:

A)loyalty programs.
B)contests.
C)sweepstakes.
D)purchase programs.

Question 42

________ encourage repeat purchasing through a formal program enrollment process and the distribution of benefits.

A)Loyalty programs
B)Contests
C)Sweepstakes
D)Purchase programs

Question 43

According to the text,________ products have formed user groups for years,where groups give the company feedback and give each other tips on how to better use the product.

A)high-tech
B)food
C)personal care
D)lifestyle

Question 44

Identify the core product for a car.

A)reliability
B)service from the dealer
C)prestige obtained from driving it
D)gas mileage

Question 45

Which of the following statements is true regarding TRUSTe?

A)It is an online service for creating customized online surveys.
B)It is an online service which helps in data mining.
C)It is an initiative which rates Web sites based on the ease with which it can be navigated.
D)It is an initiative to build user confidence in joining communities and using the Web in general.

Question 46

________ is a new process where a company takes a product or service that is widely marketed and offered in many different configurations and develops a system for customizing it to each customer's specification.

A)Direct marketing
B)Mass customization
C)Niche marketing
D)Differential marketing

Question 47

Mass customization is also referred to as:

A)one-on-one marketing.
B)niche marketing.
C)demographic marketing.
D)direct marketing.

Question 48

NikeID allows customers to build their own shoes and select the colors for just about every area of the shoe.This is an example of:

A)differential marketing.
B)one-to-one marketing.
C)niche marketing.
D)demographic marketing.

Question 49

When service recovery is necessary,customers are:

A)happy.
B)loyal.
C)satisfied.
D)unhappy.

Question 50

Which of the following is considered to be a traditional marketing metric?

A)acquisition rate
B)sales volume
C)acquisition cost
D)retention rate

Question 51

A good source of information about how to improve customer loyalty is to examine:

A)current customers.
B)new customers.
C)customers who defect.
D)potential customers.

Question 52

To arrive at the augmented product,a marketer must:

A)increase the frequency of advertising,to achieve high product recall in the minds of customers.
B)reduce prices to extents that cannot be matched by competitors.
C)go beyond expectations by offering levels of customer service that competitors cannot match.
D)meet the customer service expectations of customers.

Question 53

Successful communities on the Internet offer participants:

A)discounts on the price of the product.
B)a sense of place with codes of behavior.
C)free services for maintaining and repairing the product.
D)sample of the product before actually purchasing the product.

Question 54

Lands' End offers tailored clothing on its Web site,allowing one to choose a collar,sleeve style,pocket,etc.This is an example of:

A)mass customization.
B)niche marketing.
C)differential marketing.
D)demographic marketing.

Question 55

For a car,which of the following will be a part of the expected product?

A)gas mileage
B)reliability
C)weight
D)color

Question 56

"If you do not satisfy the customer the first time,you may not get a second chance." Identify this customer service principle.

A)great service is measured by customer satisfaction
B)service is the backbone of any business
C)compensation plans determine behavior
D)sales and service departments are complementary

Question 57

A group of customers who share information between themselves and the company about their experiences with the product or service is most likely to be known as a:

A)quality circle.
B)cohort.
C)community.
D)focus group.

Question 58

Those points of contact between the buyer and seller that are most critical to the relationship are called:

A)impact moments.
B)moments of truth.
C)judgment moments.
D)moments of impression.

Question 59

Loyalty programs are also known as:

A)frequency marketing.
B)one-on-one marketing.
C)mass marketing.
D)mass customization.

Question 60

With respect to Internet behavior,a study found that the more ________,the more that person tends to visit it and make purchases there.

A)the number of people who recommended the site to a person
B)a person uses the community features of a site
C)a person finds a site easy to navigate
D)a person finds a site visually appealing

Question 61

The basic idea behind a CRM program is to assess the value of each customer in the CIF to the firm and then develop standardized programs that appeal to most customers.

Question 62

Which of the following can be categorized as a strategic customer-based value metrics?

A)RFM value
B)acquisition cost
C)market share
D)share of wallet

Question 63

The present value of a stream of revenue that can be produced by a customer is known as lifetime customer value.

Question 64

The percentage of customers in group that were obtained at the same time who are still customers is known as the:

A)survival rate.
B)acquisition rate.
C)lifetime duration.
D)win-back rate.

Question 65

The amount of money spent on the whole category of a product is known as:

A)share of category requirements.
B)size of wallet.
C)share of wallet.
D)customer lifetime value.

Question 66

The longer a customer is retained,the longer the base profit is earned.

Question 67

Identify the correct statement about the CRM-based marketing system.

A)The acquisition rate is the percentage of customers in group that were obtained at the same time who are still customers.
B)Share of wallet indicates what percent of all purchase value in the category is your brand.
C)The survival rate is the probability of a customer being active or purchasing in a given time frame.
D)The lifetime duration is the percentage of customers who return who had previously defected.

Question 68

The expected length of time a customer will remain active is known as:

A)win-back rate.
B)survival rate.
C)lifetime duration.
D)retention rate.

Question 69

________ indicates the percent of all purchase volume in the category is your brand.

A)Share of category requirements
B)Size of wallet
C)Share of wallet
D)Customer lifetime value

Question 70

Loyal customers are often more price-insensitive than customers who need a price inducement to switch or to become a new customer.

Question 71

The probability of a customer being active or purchasing in a given time frame is represented by:

A)retention rate.
B)P (Active).
C)win-back rate.
D)lifetime duration.

Question 72

Existing customers are more expensive to serve than new customers.

Question 73

Win-back rate indicates:

A)the percentage of customers in group that were obtained at the same time who are still customers.
B)the probability of a customer being active or purchasing in a given time frame.
C)expected length of time a customer will remain active.
D)customers who return who had previously defected.

Question 74

Which of the following is a primary customer-based metric?

A)market share
B)sales volume
C)return on investment
D)lifetime duration

Question 75

Customers who see the benefits of interdependency between the buyer and the seller are known as transaction buyers.

Question 76

Many companies view their customer information file (CIF)as a key source of competitive advantage.

Question 77

The incremental costs involved in obtaining any new customer is known as acquisition cost.

Question 78

An advantage of the Internet is that customer movements on the Web can be tracked,stored,and analyzed in real time.

Question 79

There are many types of analyses that can be performed on a CIF once it has been assembled.The general name given to such analysis is data mining.

Question 80

Customer relationship management (CRM)is often used in the context of relationships that are short term in nature.