Which of the following statements is FALSE regarding the use of the 80/20 rule in managing customer relationships?
A) Advances in technology and data collection techniques allow firms to profile customers in real time.
B) Twenty percent of customers provide 80 percent of business profits.
C) Some customers are too expensive to keep given the low level of profits that they generate.
D) The 20 percent of customers in the bottom tier should be fired so the firm can focus on its top customers.
E) The firm's top customers are the most obvious candidates for retention strategies.

Question

Quizplus · Accepted Answer

The 80/20 rule, or Pareto Principle, suggests that a small percentage of customers contribute to a large percentage of profits. While it's true that some customers may be less profitable, the idea of "firing" the bottom 20% is an oversimplification and not a universally recommended practice. Effective customer relationship management involves more nuanced strategies than simply cutting off less profitable customers.

Which of the Following Statements Is FALSE Regarding the Use