Deck 10: The CRM Strategy Cycle: Acquisition, Retention

Question 1

Successful CRM begins with acquisition of the right customers and avoiding customers who will be costly to serve.

Answer 1

True

Question 2

Mining current customer information can help in acquiring the right type of new customers.

Answer 2

True

Question 3

Today, customer equity is more dependent on customer acquisition than retention.

Answer 3

False

Question 4

One of the key objectives in successful acquisition is increasing adverse selection.

Question 5

Adverse selection hurts a company by wasting money on promotional efforts to the wrong people.

Question 6

Retention strategies work best when industry retention levels are high and there is no steep skew in a company's customer base.

Question 7

Home Depot has created a "demon" list of customers who have been told not to shop there anymore.

Question 8

Conversational marketing is identical with dialogue marketing.

Question 9

Dialogue marketing is a streaming technology capable of generating a running dialogue with customers based on every interaction with the business.

Question 10

Dialogue marketing send messages based on demographic changes and life events for each and every customer in the database.

Question 11

Some companies have identified more than 400 events in a customer's life that can generate messages.

Question 12

Customers want intimate relationship with every company but this is far from occurring.

Question 13

If not satisfied during a "moment of truth" a customer may defect.

Question 14

Companies lose 40-60% of their customers each year.

Question 15

Companies should develop retention strategies based on monetary, social or humanistic bonds.

Question 16

When customers begin buying less than they did before, it is referred to as "marginalization."

Question 17

Frequent flyer programs, customer point programs and frequency programs are all examples of idiosyncratic-fit programs.

Question 18

Personalization according to the book refers to a company-controlled web site that a customer can modify to suit their purposes.

Question 19

Lifestyle stores such as Pottery Barn bundle products very cleverly. This exemplifies cross-selling.

Question 20

Migration is perhaps more important than customer retention.

Question 21

Customers may downwardly migrate due to changes in life-stage.

Question 22

Reinartz and Kumar in an empirical study showed that the idiosyncratic fit heuristic is a global reaction to programmatic customization.

Question 23

Reinartz and Kumar found that loyalty programs simply don't work.

Question 24

Studies have shown that the win back strategy, on average, results in a 60% return of lost customers within six months.

Question 25

Which of the following is false regarding acquisition of new customers?

A)Successful CRM acquisition strategy includes avoiding customers who will be costly to serve.
B)Companies should avoid targeting the wrong customers because they will only have to reject their applications later.
C)Companies should mine their data bases to identify the right types of customers.
D)Company acquisition strategies should target even those customers who will not qualify now, but they may qualify later.
E)all of the above are true

Question 26

Which of the following is NOT true regarding customer acquisition?

A)Acquisition strategies are necessary for every company to fill the pipeline with customers.
B)Acquisition is necessary to counter the inevitable attrition of customers.
C)Customer equity is more dependent on customer acquisition than on customer retention.
D)25 years ago, companies focused more on customer acquisition than retention.
E)all of the above are true

Question 27

Which of the following is NOT true regarding adverse selection?

A)It involves avoiding individuals who will have no interest in your offering.
B)It involves avoiding individuals who will not qualify for your offering.
C)Adverse selection wastes time and money in company promotional efforts.
D)Adverse selection can create bad word-of-mouth.
E)all of the above are true

Question 28

Retention strategies work best when

A)there is no skew in the company's customer base.
B)there is no elite segment of high profit customers.
C)industry retention levels are low.
D)there is a steep skew in a company's customer base.
E)A and B

Question 29

The CLV for a Domino's Pizza customer is

A)500
B)1500
C)2500
D)5000
E)50000

Question 30

Which company prepared a "Demon" customer list of those who have been told not to shop there anymore?

A)Microsoft
B)Apple
C)Home Depot
D)Best Buy
E)Barnes and Noble

Question 31

What type of marketing is about building customer lifetime personalized dialogues across all marketing channels?

A)Interactive Marketing
B)Interface Marketing
C)Conversational Marketing
D)Didactic Marketing
E)Confluence Marketing

Question 32

Which of the following is false concerning dialogue marketing:

A)It involves continuous or streaming technology.
B)It can be based on each and every customer interaction with the business.
C)It is very sensitive to the intervals between customer purchases, store visits and contact.
D)It is more effective in cross-selling when calls are outbound from the company vs. inbound from the customer.
E)all of the above are true

Question 33

Moments of truth are

A)assistance a customer receives during a crisis.
B)occurring more frequently due to social networking.
C)when customers are asked to provide sensitive, personal information.
D)when new employees are being hired and asked to take a lie detector test regarding criminal records and employment.
E)none of the above

Question 34

Each year, companies lose

A)10-20% of their customers.
B)20-40% of their customers.
C)40-60% of their customers.
D)60-80% of their customers.
E)15-25% of their customers.

Question 35

Companies should develop retention strategies based on all EXCEPT which of the following?

A)monetary rewards
B)social bonds
C)service structure
D)humanistic bonds
E)all are relevant

Question 36

When customers begin buying less than they did before, it is referred to as

A)the prime defection indicator.
B)downward migration.
C)purchase attrition.
D)marginalization.
E)all of the above

Question 37

The customer's perception of how much better than the company's other customers she is treated is referred to as

A)the idiosyncratic-fit heuristic.
B)up-selling.
C)trading-up.
D)preferential treatment.
E)rewarding.

Question 38

Frequent flyer programs, customer point programs, and frequency programs are all examples of which type of tactic?

A)preferential treatment
B)rewarding
C)personalization
D)up-selling
E)profit-driving

Question 39

When customers enjoy a relative advantage in enrolling in a program, this is referred to as

A)personalization.
B)Customization.
C)idiosyncratic fit.
D)preferential treatment.
E)attaining intimacy.

Question 40

Personalization refers to

A)a company-controlled website that a customer can modify to suit his or her purposes.
B)idiosyncratic fit.
C)customization.
D)one-on-one up-selling.
E)all of the above

Question 41

Personalization can refer to

A)how warmly a person feels he or she is treated.
B)a company-controlled website.
C)mass customization.
D)generating opinion leadership.
E)bringing friends and family into the program.

Question 42

Customization can refer to

A)personalized control of a company website.
B)company-controlled modifications to a person's Web site.
C)one-on-one focused mass personalization.
D)idiosyncratic fit adaptation.
E)none of the above

Question 43

Customization can refer to

A)adaptation in SFA.
B)CRM adapted to a specific company functional area.
C)all of the above
D)none of above
E)cross-selling in a one-to-one situation.

Question 44

Lifestyle stores such as Pottery Barn is exemplifying which of the following by bundling products cleverly?

A)up-selling
B)idiosyncratic fit bundling
C)cross-selling
D)trading up
E)customization

Question 45

Which of the following is the most conversationally oriented of all CRM strategies?

A)idiosyncratic fit heuristic
B)rewarding
C)up-Selling
D)profit driving
E)customization

Question 46

Migration

A)is the same as customer "churn" or customer attrition.
B)can provide five to ten r times more profit than retention control.
C)is the change in customer value over time.
D)refers to modifications in many loyalty programs as they reach the maturity stage.
E)all of the above except D refers to movements in a customer's life-stage

Question 47

Customers downwardly migrate for a variety of reasons. Which of the following is not one of them?

A)to relieve cognitive consonance
B)attraction to a better mix by the competition
C)change in life-stage
D)change in lifecycle
E)dissatisfaction

Question 48

Reinartz and Kumar in an empirical studied showed that

A)the idiosyncratic fit heuristic is a global reaction to programmatic customization.
B)the relationship between length of time as a customer and amount of profit for the company might be far from positive.
C)many longtime customers are nothing but barnacles.
D)loyalty may be vastly overrated.
E)B, C and D are true

Question 49

Reinartz and Kumar concluded in their study that

A)loyalty programs do not work.
B)companies should not spend too much money on short-term customers.
C)the idiosyncratic fit should be the basis of not only customization but also personalization.
D)companies should avoid short-term, transactional buyers altogether .
E)all of the above

Question 50

Which of the following is NOT true?

A)Some customers just cost too much to serve.
B)Some customers drive company profits down.
C)Companies should consider getting rid of complainers, customers who always return merchandise, and customers who only buy on sale with coupons.
D)Research has shown that customers who return merchandise consistently are oftentimes companies most profitable customers
E)Some customers will just never become profitable.

Question 51

Which of the following is NOT a brand builder?

A)public relations
B)event sponsorship
C)CRM
D)brand communities
E)all are brand builders

Question 52

Win-back strategies

A)are sometimes referred to as regain management or comeback strategies.
B)seldom are effective.
C)result in 60% return of lost customers within 6 months.
D)are more widely practiced in non-contractual settings.
E)are best used in conjunction with Trading-Up offers.