Deck 12: Managing Relationships and Building Loyalty

Question 1

In the worksheet for calculating customer lifetime value,sources of annual revenues include all EXCEPT _____________.

A)Annual account fee
B)sales
C)service fees
D)value of referrals
E)account management

Answer 1

E

Question 2

Define loyalty in a service context.

Answer 2

Loyalty is a customer's willingness to continue patronizing a firm over the long-term,preferably exclusively,and recommending the firm's products to others.

Question 3

Special treatment benefits include being known by name by the service provider.

Answer 3

False

Question 4

Steps to building a foundation of loyalty include all EXCEPT _____________.

A)delivering customer satisfaction
B)delivery service quality
C)segmenting the market to match customer needs and firm capabilities
D)acquiring customers who fit the core value proposition
E)managing the customer base through effective tiering

Question 5

Most people can think of dozens of service firms they truly like and where they are committed to going back to.

Question 6

Good relationships start with a good fit between customer needs and company capabilities.

Question 7

Which of the following are the three main zones of the satisfaction-loyalty relationship?

A)Direction; institution; affluence
B)Defection; indifference; affection
C)Detection; elimination; subversion
D)Detection; affluence; rejection
E)Direction; intention; rejection

Question 8

Defection describes customers who stop buying from a company and transfer their brand affinity to another supplier.

Question 9

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

Question 10

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
E)Structural bonds

Question 11

Firms should not assume that the "right customers" are always the ___________.

A)ones that are easily delighted
B)high spenders
C)price sensitive customers
D)average income earners
E)least costly to acquire

Question 12

Which of the following is NOT one of the four customer tiers discussed by Zeithaml,Rust,and Lemon?

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

Question 13

Which of the following is NOT one of the advantages to incremental profits of a loyal customer?

A)Profit from increased purchases.
B)Profit from decreased advertising.
C)Profit from reduced operating costs.
D)Profit from referrals to other customers.
E)Profit from price premiums.

Question 14

Many service firms put too much emphasis on value without enough consideration of the number of customers they will serve.

Question 15

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 16

In the B2B context,the smaller firms as a group have a lot of bargaining power.

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

Customers remain loyal to a firm because they experience relational benefits.

Question 19

The lead customer tier tends to generate moderate revenue,but only a small amount of business.

Question 20

Successful customer relationships cannot be built if a firm is selective about the segments they target.

Question 21

Describe the difference between miles and points on British Airways.

Question 22

Explain what a "structural bond" means.

Question 23

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

Question 24

Describe the wheel of loyalty.

Question 25

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

Question 26

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 27

DHL's less powerful accounts generate significantly lower profitability than their major accounts.

Question 28

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

Question 29

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 30

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

Question 31

What did DHL find out about its large and small accounts?

Question 32

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

Question 33

Which of the following is NOT an aspect of ING Direct'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 34

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

Question 35

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

Question 36

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 37

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 38

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

Question 39

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

Question 40

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 41

Explain how AOL got itself into legal trouble with poor churn management.

Question 42

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

Question 43

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

Question 44

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