Deck 12: Managing Relationships and Building Loyalty

Question 1

Zero defection refers to when a company can retain all customers it can serve, profitably or not profitably.

Answer 1

False

Question 2

Which of the following is NOT one of the strategies for developing loyalty bonds with customers?

A)Deepening the relationship
B)Lag-based bonds
C)Social bonds
D)Customization bonds

Answer 2

B

Question 3

Picking the "right" customers can enhance _____________.

A)Long-term revenues
B)Growth from referrals,
C)Employee satisfaction
D)All of the above.

Answer 3

D

Question 4

The wheel of loyalty is composed of which of the following three main components?

A)Create loyalty bonds; deliver quality service; segment the market
B)Create loyalty bonds; build higher level bonds; deliver quality service
C)Build a foundation for loyalty; create bundling; build higher level bonds
D)Build a foundation for loyalty; create loyalty bonds; reduce churn drivers
E)Create loyalty bonds; understand customer value; understand service value

Question 5

Factors that work to increase the profit growth from loyal customers include _____________.

A)Profit from increased purchases
B)Profit from reduced customer service costs
C)Profit from referrals to others
D)Acquisition costs can be amortized over a longer period
E)All of the above

Question 6

Which of the following is an example of a financial reward for loyal customers?

A)Priority program
B)Frequent-flyer miles
C)Special recognition and appreciation
D)Free gifts
E)Structural bonds

Question 7

True loyalty refers to a high "share of heart" where customers have a true liking of the brand/service.

Question 8

The common objective of a CRM system is to offer a unified customer interface that delivers customization and personalization.

Question 9

Rather than transforming the entire business, service firms should focus on clearly defined problems within their customer relationship cycle.

Question 10

Marketing activity designed to create extended relationships with customers is called _____________.

A)relationship marketing
B)loyalty programs
C)transactional marketing
D)customer service marketing

Question 11

The key questions to ask when defining a firm's customer relationship strategy include all EXCEPT _____________.

A)What is the increase in profit from increase the share-of-wallet with our current customers?
B)How much customization or one-to-one marketing and service delivery is suitable and profitable?
C)How will top management feel about our strategy?
D)How should our value proposition change to increase customer loyalty?
E)How much time and resources can we provide to CRM right now?

Question 12

It is critical for service firms to understand the needs of customers within different profitability tiers and adjust their service levels accordingly.

Question 13

Loyalty management begins with segmenting the market to match customer needs and firm profitability.

Question 14

The two ends of the customer satisfaction/loyalty relationship are terrorist and apostle.

Question 15

The longer customers stay with a firm, the more profitable they become.

Question 16

"Right" customers are always big spenders.

Question 17

Which of the following is NOT one of the key strategies used to reduce customer defections?

A)Eliminate nuisance customers.
B)Address key churn drivers.
C)Implement effective complaint handling and service recovery procedures.
D)Increase switching costs.
E)Analyze customer defections and monitor declining accounts.

Question 18

The segment that sees high value in firm's offer, spends more over time while costing less to maintain, and spreads positive WOM is called ___________.

A)Gold
B)Platinum
C)Iron
D)Lead

Question 19

Customers derive benefits of greater confidence, social benefits and special treatment from loyal relationships with firms.

Question 20

Analysis to assess the gap between the actual and potential value of the customers involves _____________.

A)Analysis of current purchase behaviour
B)Analysis of how long do customers remain with the firm
C)Analysis of management's loyalty programs
D)All of the above
E)Only a, b & c

Question 21

Enterprise Rent-A-Car targets customers who need a temporary replacement car.

Question 22

Explain what a "structural bond" means.

Question 23

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

Question 24

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

Question 25

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

Question 26

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

Question 27

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

Question 28

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."

Question 29

Capital One 360 could be called the fast-food model of consumer banking because it is about as no-frills as it gets.

Question 30

What are the three clusters of benefits that customers derive from relationships with the firm?

Question 31

Describe the wheel of loyalty.

Question 32

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

Question 33

Common CRM applications include all of the following EXCEPT _____________.

A)Data collection
B)Marketing automation
C)Data entry
D)Sales force automation
E)Finance automation

Question 34

Which of the following is NOT an aspect of Capital One 360'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

Question 35

Common failures in CRM implementation include all of the following EXCEPT _____________.

A)employee enthusiasm about CRM
B)inadequate support from top management.
C)inadequate understanding of customer lifetime value
D)lack of coordination
E)failure to reengineer business processes

Question 36

Define loyalty in a service context.

Question 37

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

Question 38

What benefits do customers derive from relationships in service industries?

Question 39

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

Question 40

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

Question 41

Discuss how tiering helps a leading U.S. market research agency better understand its customers.

Question 42

Discuss how Vanguard Group's pricing is set up to reward the right kind of customers.

Question 43

How can firms reduce customer churn, and what proactive and reactive measures can they take?

Question 44

Discuss the benefits offered by British Airways to its Gold tier members.

Question 45

Describe the difference between miles and points on British Airways.