Question 1

The term __________________ refers to the rate at which consumers leave a product or service.

Accepted Answer

churn rate

Question 2

Circle the equation that is true most firms with a profitable customer base:

Accepted Answer

This equation states that the cost of acquiring a customer is less than the present value of the future profits that customer will generate, which is indicative of a profitable customer base. Option B and C have the CLV and Customer Acquisition Costs reversed, which would indicate the company is losing money on its customers. Option D refers to product/market fit, which is a different concept from customer profitability.

Question 3

Rent the Runway sees a much higher (75 percent) conversion rate from friend referrals than from other marketing methods

Accepted Answer

Rent the Runway has reported that the conversion rate from friend referrals is 75 percent, which is significantly higher than other marketing methods.

Question 4

Describe why Rent the Runway's customers have an especially strong lifetime customer value?

Accepted Answer

The answer of Describe why Rent the Runway's customers have...

Question 5

Several have wondered how big sharing firms can get. Airbnb has more beds than any hotel chain and Uber dwarfs any taxi or car service firm, but ZipCar never grew as large as major car rental firms. To get a sense of the size of the firm, Rent the Runway has had over 5.5 million women as customers of their service.

Accepted Answer

The statement is true, Rent the Runway has had over 5.5 million women as customers of their service.

Question 6

Explain how Rent the Runway Unlimited subscription service works.

Accepted Answer

The answer of Explain how Rent the Runway Unlimited subscription...

Question 7

Essay: How does the Rent the Runway model compare with firms like Uber and Spotify?

Accepted Answer

The answer of Essay: How does the Rent the Runway...

Question 8

Describe why CLV is especially difficult for new firms with new models to calculate.

Accepted Answer

The answer of Describe why CLV is especially difficult for...

Question 9

Which of the following is not a reason why Rent the Runway appeals to designers?

Accepted Answer

All of the reasons listed demonstrate the appeal Rent the Runway has for designers, so none of them would be the "not" reason.

Question 10

Which of the following did not help create demand for Rent the Runway?

Accepted Answer

Option C mentions flash sales sites, which were not a factor in creating demand for Rent the Runway. The other options A, B, and D all suggest factors that led to the creation of demand for the company's services.

Question 11

The term ____________________ refers to when founders of a company alter their product offering, business model, or target market in hopes of crafting a more viable business.

Accepted Answer

The answer of The term ____________________ refers to when founders...

Question 12

The term _______________________ is often used in entrepreneurship and new product development and refers to a bare-bones offering that allows entrepreneurs and product developers to collect customer feedback and to validate concepts and assumptions that underlie a business idea.

Accepted Answer

The answer of The term _______________________ is often used in...

Question 13

____________________ refers to the amount of money a firm spends to convince a customer to buy (or in the case of free products, try or use) a product or service.

Accepted Answer

The answer of ____________________ refers to the amount of money...

Question 14

The term ________________________ refers to the current value of future profits that will accrue from acquired customers.

Accepted Answer

The answer of The term ________________________ refers to the current...

Question 15

Determining product/market fit is often very expensive for entrepreneurs, since it amounts, essentially, to fully building out a firm's website and operational model.

Accepted Answer

Determining product/market fit does not necessarily require fully building out a firm's website and operational model. It can be done through market research, customer feedback, and other methods that do not incur significant expenses.

Question 16

________________________ refers to the value of future cash flows discounted into today's dollars (it is discounted because a dollar today should be worth more in the future assuming inflation or the potential to earn money on the dollar if it is invested).

Accepted Answer

The answer of ________________________ refers to the value of future...

Question 17

The term ______________________ conveys the degree to which a product satisfies market demand. Successful efforts should be desired by customers, and scale into large, profitable businesses.

Accepted Answer

The answer of The term ______________________ conveys the degree to...

Question 18

Creating a business often involves convincing suppliers to participate in your new offering. While Rent the Runway had proven customer interesting, some designers had initial concerns about Jenn Hyman and Jenny Fleiss's firm. Briefly describe supplier concern.

Accepted Answer

The answer of Creating a business often involves convincing suppliers...

Question 19

Describe the experiments Rent the Runway's founders conducted to verify their idea even before building out their website and operations model.

Accepted Answer

The answer of Describe the experiments Rent the Runway's founders...

Question 20

The halo-effect from a positive experience renting a designer's more daring dresses may prompt a woman to purchase more frequently-worn staples like a little black cocktail dress, leather leggings, or accessories.

Accepted Answer

The halo-effect refers to a phenomenon in which a positive experience with one product or service leads to a positive perception of the overall brand and prompts the customer to try other products from the same brand. In this case, a positive experience renting daring dresses from a designer may lead a woman to trust the designer's overall aesthetic and quality, prompting her to purchase other items like little black dresses or accessories.

Quiz 12: Rent the Runway: Entrepreneurs Expanding an Industry by Blending Tech with Fashion