Question 1

Share of wallet is the percentage of a customer's spending within a category that is captured by a given service.

Accepted Answer

Share of wallet is indeed defined as the percentage of a customer's spending within a specific category that a business is able to capture.

Question 2

The Net Promoter Score is based on the idea that word-of-mouth communication,rather than any of the other metric,is the best predictor of growth and financial performance.

Accepted Answer

The Net Promoter Score (NPS) methodology is based on the belief that the recommendation of a product or service to friends or colleagues is a strong indicator of customer satisfaction and long-term business success. Therefore, NPS measures the willingness of customers to recommend a company to others and uses this information to calculate a score that correlates with business growth and financial performance.

Question 3

Attracting a new customer is five times as costly as retaining an existing one.

Accepted Answer

According to various studies, it is believed that attracting a new customer can cost five times as much as retaining an existing one. Maintaining a strong relationship with existing customers can not only save money but also provide long-term benefits such as trust, loyalty, and positive word-of-mouth referrals.

Question 4

Consumers believe that advertisements in publications like Newsweek,Time and similar magazines have the highest level of credibility.

Accepted Answer

The statement is not entirely accurate. According to a survey conducted by the market research firm Ipsos, consumers rank word-of-mouth recommendations from family and friends as the most credible source of information, followed by reviews and recommendations from independent experts. Advertisements in publications like Newsweek and Time are not rated as highly credible as these sources.

Question 5

From the inception of service quality,managers had highly sophisticated tools to measure the impact of improved service on profits.

Accepted Answer

Initially, managers did not have highly sophisticated tools to measure the impact of improved service on profits; such tools and methodologies have evolved over time with advancements in research and technology.

Question 6

Service encounters are among the key drivers of service quality.

Accepted Answer

Service encounters involve interactions between customers and service providers, and they heavily influence customers' perceptions of service quality.

Question 7

The Net Promoter Score is based on just one survey question.

Accepted Answer

The Net Promoter Score is calculated based on the responses to one specific question: "How likely are you to recommend [company/product/service] to a friend or colleague?". This question is designed to measure customer loyalty and satisfaction. However, additional questions can be included in the survey to provide more context and insight into the customer experience.

Question 8

Companies sometimes aim too high in setting improvement targets for nonfinancial measures of performance.Managers tend to make mistakes in this area by assuming:

Accepted Answer

Assuming that 100 percent customer satisfaction is the only important goal is a common mistake managers make when setting improvement targets for nonfinancial measures. This approach can be unrealistic and may not consider other important aspects of performance.

Question 9

Evidence shows that customer perceptions of quality do not affect consumer intentions.

Accepted Answer

This statement is false. Customer perceptions of quality do affect consumer intentions. Positive perceptions of quality can lead to increased loyalty and repeat purchases, while negative perceptions can lead to decreased satisfaction and a loss of customers.

Question 10

Service quality,like advertising,has a cumulative effect on a company's profit.

Accepted Answer

Service quality has a direct impact on customer satisfaction and loyalty, which in turn leads to increased sales, repeat business, and positive word-of-mouth recommendations. Over time, this cumulative effect can significantly boost a company's profits.

Question 11

Research by TARP Worldwide,Inc.found that only 7 percent of customers who are "neutral or very dissatisfied" say they will "definitely repurchase" from the same company.

Accepted Answer

The research findings state that only 7 percent of customers who are "neutral or very dissatisfied" say they will "definitely repurchase" from the same company, making option A true.

Question 12

The Net Promoter Score is embraced by virtually all executives,researchers and loyalty experts as the "single most reliable indicator of a company's ability to grow."

Accepted Answer

While the Net Promoter Score (NPS) is widely used and valued by many organizations as a metric for customer loyalty and potential for growth, it is not embraced by "virtually all" executives, researchers, and loyalty experts. There is debate and criticism regarding its effectiveness and reliability as the "single most reliable indicator" of a company's ability to grow.

Question 13

Service quality can help companies attract more and better customers to the business through offensive marketing.

Accepted Answer

Service quality is an important factor that can differentiate a business from its competitors and attract more customers to the business through offensive marketing strategies. By offering high-quality services, a business can create a positive image and reputation in the market, which can help in acquiring new customers and retaining existing ones. Therefore, service quality plays a critical role in the success of a business and can be used as a competitive advantage to increase revenue and profitability.

Question 14

Research by TARP Worldwide,Inc.found that a full 96 percent of customers who report being "very satisfied" (i.e.,they are in the "top box" in satisfaction)say they will "definitely repurchase" from the same company.

Accepted Answer

The research conducted by TARP Worldwide, Inc. found that 96% of customers who reported being "very satisfied" will "definitely repurchase" from the same company.

Question 15

Defensive marketing can be used to reduce customer defection.

Accepted Answer

Defensive marketing strategies aim to prevent or reduce customer defection by addressing the reasons why customers may consider switching to a competitor. This can include offering loyalty programs, providing excellent customer service, and differentiating products or services from competitors.

Question 16

According to field research conducted with senior executives in 60 companies,almost all companies identify and act on correct non-financial measures.

Accepted Answer

Most companies struggle to identify the right non-financial measures that predict future financial performance, and even when they do identify them, they often fail to act on them effectively.

Quiz 16: The Financial and Economic Impact of Service