Deck 5: Customer Relationships and Customer Service

Question 1

Customer segmentation attempts to?

A) Satisfy profitable customers
B) Reduce costs of serving low-profit customers
C) Both satisfy profitable customers and reduce costs of serving low-profit customers
D) Neither satisfy profitable customers nor reduce costs of servicing low-profit customers

Answer 1

C

Question 2

Transaction elements of customer service occur during what time frame?

A) Prior to the sale of goods and services
B) During the order cycle
C) After the product or service has been sold
D) Before the product or service is designed

Answer 2

B

Question 3

Which of the following is not a pre-transaction element of customer service?

A) Customer service authority
B) Customer service policies
C) Information system development
D) Order entry

Answer 3

D

Question 4

The CRM applications market is (in recent years)?

A) Not growing
B) Growing
C) Neither growing nor not growing
D) Impossible to determine growth rate of CRM applications market

Question 5

Niche segmentation of customers involves segmenting customers based on all of the following except?

A) Customers with similar social media presence
B) Customers with similar needs
C) Customers with similar buying attitudes
D) Customers with similar buying habits

Question 6

All of the following are examples of customer service failures except?

A) Stockouts
B) Product failure
C) Failure to adhere to customer service policies
D) Late deliveries

Question 7

The book CRM Unplugged: Releasing CRM's Strategic Value details three questions that companies should answer prior to implementing a customer service improvement initiative. Which of the following questions is not one of the three?

A) What is the expected effect on the firm's profitability?
B) What is the value being added and for which customers?
C) At what cost to existing customer goodwill is this improvement being made?
D) Does it strengthen or dilute the firm's competitive strategy?

Question 8

"A person, household, or company that over time yields a revenue stream that exceeds by an acceptable amount the company's cost stream of attracting, selling, and servicing that customer" refers to a?

A) Preferred customer
B) Profitable customer
C) Positive customer
D) Perfect customer

Question 9

CRM refers to which concept?

A) Customer returns management
B) Customer relationship management
C) Customer refurbishment management
D) Customer retention management

Question 10

A company collecting demographic information about its customers would most likely try to capture which of the following kinds of information?

A) Previous customer responses to advertisements
B) History of customer sales calls
C) Customer age
D) Customer purchase history

Question 11

Grouping customers within a firm's customer database is referred to as?

A) Customer segmentation
B) Customer discrimination
C) Customer loyalty determination
D) Customer partitioning

Question 12

An airline that divides its customers into VIP, Preferred, and Regular customer sets is practicing what principle?

A) Customer prioritization
B) Customer displacement
C) Customer segmentation
D) Customer clustering

Question 13

Information collected about customers may include all of the following except?

A) Customer transactions
B) Customer contacts
C) Demographic information
D) Customer health information

Question 14

Customer service policies will likely consider all of the following except?

A) Guarantees
B) Warranties
C) Performance standards
D) Pricing

Question 15

Customer transactions information will likely include which of the following?

A) Sales calls and service requests
B) Customer age and education level
C) Purchase and return histories
D) Customer responses to promotions

Question 16

"Customer service authority" most closely refers to?

A) Determining which aspects of customer service a customer may access
B) Determining how a customer may interact with customer service
C) Determining how customer service decision-making authority is allocated within the firm
D) Determining who within the organization may make contact with the customer

Question 17

All of the following are customer service elements except?

A) Extra-transaction elements
B) Pre-transaction elements
C) Transaction elements
D) Post-transaction elements

Question 18

The order cycle refers to?

A) Time from product or service design to delivery to customer
B) Time from product shipment to receipt by customer
C) Time from product or service design initiation to availability for customer purchase
D) Time from customer order initiation to product or service delivery to customer

Question 19

The creation and management of customer relationships should lead to all of the following except?

A) Enhanced customer experience
B) Enhanced customer loyalty
C) Increased sales
D) Increased product returns

Question 20

"Managing the relationships among people within an organization and between customers and the company's customer service representatives in order to improve the bottom line" is the definition of which concept?

A) The customer relationship process
B) Customer satisfaction optimization
C) Customer relationship management
D) The customer retention process

Question 21

In assessing possible new customers, a distributor desires that a new customer have a customer lifetime value of at least $10,000. Assuming an 8% discount rate, average annual sales of $65,000, and a customer expected lifetime of 10 years, what is the minimum profit margin needed to assure a lifetime value of at least $10,000?

A) 10%
B) 11%
C) 12%
D) 13%

Question 22

What is the Excel function that is used to calculate customer lifetime value?

A) EMV
B) CLT
C) PV
D) NPV

Question 23

The concept of versioning is most likely to be found in what service area?

A) Food delivery services
B) Information services
C) Bank services
D) Pet grooming services

Question 24

A major Internet provider provides technical support assistance via Twitter. This provider is using what type of customer relationship program initiative?

A) Engaging customers using social media
B) Product customization
C) Customer loyalty program
D) Product placement program

Question 25

CRM implementation failure can be attributable to all of the following except?

A) A lack of an approach to analytics
B) Lack of access to customer data
C) The inability to create an enterprise-wide customer relationship strategy
D) The difficulty in integrating CRM applications with legacy systems

Question 26

After customer segmentation, which activity takes place?

A) Determine which customers to target with marketing
B) Determine appropriate communications channels
C) Determine which customers to target with marketing and determine appropriate communications channels
D) An activity other than determining which customers to target with marketing or determining appropriate communications channels

Question 27

Creating a company presence on Facebook, Twitter, Instagram, etc., is most likely to be considered what type of customer relationship program initiative?

A) Engaging customers using social media
B) Product customization
C) Customer loyalty program
D) Product placement program

Question 28

Customer A generates $12,500 (on average) of annual sales for a supplier with a profit margin of 15%. Customer B generates $18,750 (on average) of annual sales for the supplier with a profit margin of 10%. Assume a 7% discount rate and that each customer has an expected lifetime of 5 years. Which customer has a greater customer lifetime value?

A) Customer A
B) Customer B
C) Customer A and B have roughly equivalent lifetime values
D) Cannot be determined from the information given

Question 29

Customer A generates $17,500 (on average) of annual sales for a supplier with a profit margin of 12%. Customer B generates $19,000 (on average) of annual sales for the supplier with a profit margin of 10%. Assume a 7% discount rate and that each customer has an expected lifetime of 5 years. Which customer has a greater customer lifetime value?

A) Customer A
B) Customer B
C) Customer A and B have equivalent lifetime values
D) Cannot be determined from the information given

Question 30

Customer lifetime value is used to segment customers based upon their?

A) Current profitability only
B) Future profitability only
C) Both current and future profitability
D) Neither current nor future profitability

Question 31

In assessing possible new customers, a distributor desires that a new customer have a customer lifetime value of at least $2,000. Assuming a 7% discount rate, average annual sales of $8,000, and a customer expected lifetime of 5 years, what is the minimum profit margin needed to assure a lifetime value of at least $2,000?

A) 7%
B) 6%
C) 5%
D) More than 7%

Question 32

Which of the following describes a Customer Loyalty Program?

A) Firms can create customer communities using company websites and social networks like Facebook to facilitate communication or the exchange of ideas between customers and company personnel.
B) Social media (such as Facebook and Twitter) present a number of opportunities for companies to build, maintain, and strengthen relationships with customers.
C) Rewards repeat customers with discounts or other items depending on the frequency of the purchases.
D) Allows customers to customize goods and services to create a uniqueness to the product.

Question 33

What is the customer lifetime value of a customer that that generates $5,000 (on average) of annual sales? Assume an 8% discount rate, a 15% profit margin, and a customer expected lifetime of 8 years.

A) Less than $2,000
B) Between $2,000 and $3,000
C) Between $3,000 and $4,000
D) More than $4,000

Question 34

Casinos reward card game and slot players based on the amount of money that a player spends. This system is what type of customer relationship program initiative?

A) Product customization
B) Engaging customers using social media
C) Product placement program
D) Customer loyalty program

Question 35

What is the customer lifetime value of a customer that that generates $1,000 (on average) of annual sales? Assume a 7% discount rate, a 15% profit margin, and a customer expected lifetime of 10 years.

A) $140
B) $1,054
C) $21
D) Cannot be determined from the information given

Question 36

Neighborhood marketing primarily attempts to segment customers based on?

A) Geography
B) Proximity to the seller
C) Proximity to the manufacturer
D) Household size

Question 37

Harley-Davidson's creation of Harley Owners Groups on the company's website is an example of what type of customer relationship initiative?

A) Product customization
B) Engaging customers using social media
C) Building customer communities
D) Customer loyalty program

Question 38

Each item below is a potential downside to the deployment of a CRM application except?

A) Expensive
B) May decrease access to customers
C) Time consuming
D) Difficult to train users

Question 39

A new coffee shop has set up a punch-card system where customers that receive 10 punches (one for each purchase in the shop) will then receive a free drink of their choice. This system is what type of customer relationship program initiative?

A) Engaging customers using social media
B) Product customization
C) Customer loyalty program
D) Product placement program

Question 40

A humorous video created by a company that becomes very popular in a short period of time is an example of?

A) Contagious marketing
B) Viral marketing
C) Distributed marketing
D) Invasive marketing

Question 41

An email message being incorrectly classified as spam and blocked is referred to as?

A) Negative positive blocking
B) False positive blocking
C) False negative blocking
D) Negative negative blocking

Question 42

A company estimates that it retained 1,700 customers but lost 250 customers during a customer relationship program. What is the maintenance ratio?

A) 250/1700 = 0.15
B) 1700/(250 + 1700) = 0.87
C) 1700/250 = 6.8
D) 250/(250 + 1700) = 0.13

Question 43

Targeted email campaigns are typically?

A) High cost and high response rate
B) High cost and low response rate
C) Low cost and high response rate
D) Low cost and low response rate

Question 44

Response rate for consumer direct mail (as of 2010) was approximately?

A) 1%
B) 3%
C) 10%
D) 20%

Question 45

Marketing to a customer by sending materials to a potential customer's address is known as?

A) Telemarketing
B) Parcel marketing
C) Direct mail
D) Indirect mail

Question 46

Which performance metric is incorrectly matched with its description?

A) Program return on investment = additional profit generated/program investment
B) Maintenance ratio = # customers retained/# customers lost
C) Customer loss rate = # of customers lost/# customers added
D) Conversion efficiency = # of new customers generated/program investment

Question 47

Assembled groups of customers giving their opinions to company personnel regarding various proposed program initiatives are known as?

A) Open forums
B) Focus groups
C) Roundtables
D) Town halls

Question 48

Most of a firm's profits being generated by a relatively small group of customers is referred to as the?

A) 90/10 rule
B) 80/20 rule
C) 70/30 rule
D) 50/50 rule

Question 49

Focus groups for proposed customer service program initiatives tend to be composed of?

A) Customers
B) Company employees
C) Suppliers
D) Auditors

Question 50

The 80/20 rule for customer profitability refers to what?

A) That most of a firm's customers are likely to be high profit customers
B) That most of a firm's efforts at retaining customers will be focused on a small group of customers
C) That most of a firm's profits are generated from a relatively small group of customers
D) That most of a firm's customers will complain about service at some point in time.

Question 51

A small business owner has noticed that many of the marketing emails (for example, emails advertising an upcoming sale) are being labeled as spam by email services. This would likely be an example of?

A) Negative positive blocking
B) False negative blocking
C) False positive blocking
D) Negative negative blocking

Question 52

Customer relationship initiatives will?

A) Remain largely static
B) Need to be revised
C) Need to be improved
D) Need to be revised and improved

Question 53

Program ROI is determined by which of the following?

A) Additional profit generated/program investment
B) # of customers lost/total # of customers
C) # new customers generated/program investment
D) # of key customers/total # of customers

Question 54

Performance metrics for customer relationship initiatives should measure?

A) Customer satisfaction
B) Customer loyalty
C) Both customer satisfaction and customer loyalty
D) Neither customer satisfaction nor customer loyalty

Question 55

The use of the telephone to identify potential new customers is referred to as?

A) Telemarketing
B) Telepresence
C) Telekinetics
D) Telebranding

Question 56

A direct mail campaign would likely be _______ than an email campaign.

A) Less expensive and less time consuming
B) Less expensive and more time consuming
C) More expensive and less time consuming
D) More expensive and more time consuming

Question 57

Delivery of target communications/marketing to customers that are a firm's worst (least profitable) should focus on?

A) Converting the customers to be more profitable
B) "Firing" the customers in a diplomatic way
C) Abruptly ending communication with the customers
D) Steering the customer to other in-house products and services

Question 58

If a company knows that it retained 1,700 customers but lost 250 customers, it would be able to calculate which customer relationship program performance metric?

A) Conversion efficiency
B) Customer loss rate
C) Senior management commitment
D) Maintenance ratio

Question 59

Direct mail is often used for all of the following except?

A) Produce prospective customer leads
B) Sell to existing customers
C) Enhance customer relationships
D) Terminate relationships with bad customers

Question 60

Customer relationship initiatives for a firm's best customers should focus on?

A) Maintaining and cultivating the existing relationship
B) Attempting to increase sales of additional goods and services to these customers
C) Both maintaining and cultivating the existing relationship and attempting to increase sales of additional goods and services to these customers
D) Severing ties with the customers

Question 61

An external customer service audit would most likely identify which of the following?

A) Service characteristics that are important to shareholders
B) Service characteristics that are important to firm executives
C) Service characteristics that are important to suppliers
D) Service characteristics that are important to customers and customer expectations for those characteristics

Question 62

External customer service audits are likely to occur?

A) Once, at the beginning of a customer service initiative
B) Repeatedly over time
C) Once, at the conclusion of a customer service initiative
D) Only in case of a customer service failure

Question 63

The organization within a firm that is most likely to be responsible for internal and external audits, for the creation of strategic service plans, and other customer service activities is likely the?

A) Customer service department
B) Customer focus department
C) Customer satisfaction department
D) Customer engagement department

Question 64

A bank allowing customers to access bank account information via automated systems is an example of?

A) A customer allocation approach
B) A customer responsibility approach
C) A customer engagement approach
D) A customer participation approach

Question 65

An internal customer service audit should provide information on all of the following except?

A) Policies
B) Measures
C) Practices
D) Pricing

Question 66

Recovery, in the context of the four basic customer service principles, refers to?

A) Companies keeping their promises with services that are accurate and dependable
B) Companies respecting their customers and treating them in a fair and ethical way
C) Companies adding unexpected touches to their service
D) Companies fixing their customers' problems in a quick, meaningful way

Question 67

Which customer service strategy element is achieved when customer service meets or exceeds customer expectations?

A) High quality customer service
B) Creating value with customer service
C) Customer contact centers
D) Outsourcing customer service

Question 68

McDonald's restaurants responded to customer dissatisfaction in the early 2000s by?

A) Incorporating healthier meal options and remodeling restaurants
B) Closing restaurants in some areas
C) Increasing portion size
D) Decreasing availability of some breakfast items

Question 69

The "high quality customer service" element of a customer service strategy is achieved by attention to all of the following except?

A) "Wow" factor
B) Reliability
C) Fairness
D) Pricing

Question 70

Employee job satisfaction is __________ with customer service performance productivity.

A) Weakly correlated
B) Correlated
C) Strongly correlated
D) Not correlated

Question 71

A modern name for a customer call center is a?

A) Customer interaction center
B) Customer networking center
C) Customer contact center
D) Customer focus center

Question 72

Customer satisfaction surveys, as part of an external customer service audit, should include all of the following except?

A) Opportunities for a customer to indicate satisfaction with firm performance on each customer service element
B) Opportunities for a customer to indicate satisfaction with a firm's competitors
C) Opportunities to express customer changes in demographics (e.g., changes in marital status, address, etc.)
D) Opportunities to provide free-form comments

Question 73

Fostering achievements in customer service as a part of a customer service strategy should include which of the following?

A) Employee incentives
B) Customer incentives
C) Employee training
D) Customer training

Question 74

A customer contact center is responsible for?

A) Integrating all methods that a customer can use to contact a business
B) Reaching out to customers by telephone
C) Administering customer satisfaction surveys
D) Responding to customer complaints

Question 75

A company keeping its promises and delivering services that are accurate and dependable refers to which basic customer service principle?

A) Recovery
B) Reliability
C) Fairness
D) Wow factor

Question 76

A coffee shop instructing their servers to add decorative designs to the foam on coffee drinks is seeking to maximize which basic customer service principle?

A) Recovery
B) Reliability
C) Fairness
D) Wow factor

Question 77

External customer service audits are used to?

A) Identify service characteristics that are important to customers as well as their performance expectations for each characteristic
B) Identify problematic customers for further customer service attention
C) Identify customers who have received excellent customer service
D) Reward employees for providing excellent customer service

Question 78

An audit that allows the organization to review its current customer service measures, policies, and practices is referred to as?

A) An external customer service audit
B) An internal customer service audit
C) A retroactive customer service audit
D) A comprehensive customer service audit

Question 79

That overall job satisfaction is a critical link to employee performance, including their customer service performance, is sometimes referred to as?

A) The joyful-producer hypothesis
B) The happy-efficient worker hypothesis
C) The happy-productive worker hypothesis
D) The productive worker hypothesis

Question 80

The overall objective of an internal customer service audit is to?

A) Identify customer service objectives for future initiatives
B) Identify employees that are failing to perform adequately
C) Identify any inconsistencies between the firm's practice of customer service and the actual requirements of its customers
D) Identify customers that frequently interact with the firm