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41 Cards in this Set
- Front
- Back
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_____________ is the number of customers at the end of the year, divided by the number of customers at the start of the year.Select one: a. Defection rate b. Retention rate c. Churn rate d. Discount rate |
b. Retention rate |
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________________ is the ongoing process of identifying and creating new value with individual customers and sharing these benefits over a lifetime of association with them.Select one: a. Customer Relationship Management b. Multidimensional scaling c. Target marketing d. Perceptual mappingFeedback |
a. Customer Relationship Management |
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__________________ is the level after which the firm’s communications create customer resentment.Select one: a. Communications retention rate b. Communications benchmark c. Communications tipping point d. Communications black box |
c. Communications tipping point |
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According to the text, all of the following are approaches to improving customer lifetime value for potential customers EXCEPT:Select one: a. ignoring potential customers b. cutting prices to attract customers c. acquiring new customers d. retrieving former customers |
b. cutting prices to attract customers |
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According to the text, all of the following are methods used to increase customer lifetime value EXCEPT:Select one: a. increase the profit margin b. increase the discount rate c. increase the customer retention rate d. decrease the customer defection rate |
b. increase the discount rate |
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According to the text, all of the following are options used to increase customer the margin from current customers EXCEPT:Select one: a. customer satisfaction and loyalty b. standardization c. raise prices d. reduce operating costs |
b. standardization |
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According to the text, the profit earned from an individual customer during a single time period is called _____________.Select one: a. cost of capital b. profit margin c. current assets d. customer lifetime value |
b. profit margin |
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According to the text, which of the following is NOT a method of increasing customer lifetime value?Select one: a. Increase the customer defection rate. b. Increase the profit margin. c. Reduce the discount rate. d. Increase the customer retention rate. |
a. Increase the customer defection rate |
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According to the text, which of the following is NOT an approach to improving customer lifetime value for current customers?Select one: a. Retrieve current customers. b. Delete customers. c. Improve customer retention. d. Grow customer margins. |
a. Retrieve current customers. |
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According to the text, which of the following is NOT mentioned as one of the three issues crucial for success of a CRM?Select one: a. Customer benefits b. Technology c. Competitor benchmarking d. CRM system objectives |
c. Competitor benchmarking |
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All of the following are characteristics of superior customer databases EXCEPT:Select one: a. accessible b. expensive c. relevant d. accurate |
b. expensive |
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All of the following are NEW ways in the changing view of optimizing shareholder value EXCEPT:Select one: a. firms should fire some customers b. customers are the firm’s core assets c. product profitability drives incentive programsd. customer databases are pivotal |
c. product profitability drives incentive programs |
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All of the following are reasons for ceasing to do business with a current customer or forgoing a relationship with a potential customer EXCEPT:Select one: a. Standardization requirements b. Non-payer c. Capacity constraints d. Mismatched to the offer |
a. Standardization requirements |
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Customer lifetime value (CLV) depends on all of the following factors EXCEPT:Select one: a. retention rate b. profit margin c. inflation rate d. discount rate |
c. inflation rate |
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Customer lifetime value (CLV) depends on which of the following factors?Select one: a. All of the indicated factor b. Discount rate c. Profit margin d. Retention rate |
a. All of the indicated factors |
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For which of the following types of rewards does the customer accumulate points, then collect the reward?Select one: a. Hyperbolic reward b. Virtual reward c. Probabilistic reward d. Deterministic reward |
d. Deterministic reward |
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For which of the following types of rewards does the customer win either a large reward or nothing?Select one: a. Virtual reward b. Deterministic reward c. Probabilistic reward d. Hyperbolic reward |
c. Probabilistic reward |
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In the customer lifetime value formula, “d” represents ______________.Select one: a. discount rate b. defection rate c. doubled rate d. declining rate |
a. discount rate |
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In the customer lifetime value formula, “r” represents ______________.Select one: a. reduction rate b. regulated rate c. retention rate d. profit margin rate |
c. retention rate |
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Most firms invest heavily in sophisticated accounting systems and data analysis tools to help managers answer questions that include all of the following EXCEPT:Select one: a. Should we discontinue this old product and, if so, when? b. Should we introduce a new product? c. Are our current products profitable? d. How ethical are our employees? |
d. How ethical are our employees? |
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Suppose the firm earns an annual profit margin of $400,000. The customer retention rate is 70 percent, and the firm’s discount rate is 12 percent. If the margin multiple is 1.67, then what is the customer lifetime value?Select one: a. $80,000 b. $280,000 c. $668,000 d. $33,600 |
c. $668,000 |
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The _____________ is the firm’s cost of capital.Select one: a. discount rate b. growth rate c. retention rate d. defection rate |
a. discount rate |
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The ______________ is the probability that a customer at the start of the year will still be a customer at the end of the year.Select one: a. discount rate b. retention rate c. growth rate d. defection rate |
b. retention rate |
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The discount rate is typically provided by the firm’s ________________.Select one: a. Chief Financial Officer b. Board of Directors c. Chief Executive Officer d. Chief Marketing Officer |
a. Chief Financial Officer |
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To attract new customers, a firm has to incur a(n) ______________, which needs to be a part of the customer lifetime value calculation.Select one:a. defection cost b. retention cost c. acquisition cost d. discount cost |
c. acquisition cost |
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What is the calculated defection rate if a firm starts the year with 100 customers and ends the year with 80 of these same customers?Select one: a. 60 percent b. 80 percent c. 40 percent d. 20 percent |
d. 20 percent |
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What is the calculated retention rate if a firm starts the year with 100 customers and ends the year with 80 of these same customers?Select one: a. 60 percent b. 90 percent c. 70 percent d. 80 percent |
d. 80 percent |
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Which of the following accurately describes the 20:80 rule?Select one: a. There is a 20 percent probability that a firm will lose 80% of its customers annually. b. 20 percent of the firm’s revenues are derived from 80 percent of its customers. c. There is a 20 percent probability that a firm will acquire 80 new customers annually. d. 20 percent of the firm’s expenses are derived from 80 percent of its customers. |
b. 20 percent of the firm’s revenues are derived from 80 percent of its customers. |
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Which of the following accurately describes the 20:80:20 rule?Select one: a. 20 percent of the firm’s revenues are derived from 80 percent of its customers, which represents 20% of the firm’s losses. b. There is an 20 percent probability that a firm will acquire 80 new customers annually. c. 20 percent of the firm’s expenses are derived from 80 percent of its customers, which represents 20% of the firm’s losses. d. There is a 20 percent probability that a firm will lose 80% of its customers annually. |
a. 20 percent of the firm’s revenues are derived from 80 percent of its customers, which represents 20% of the firm’s losses |
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Which of the following accurately describes the 80:20 rule?Select one: a. There is an 80 percent probability that a firm will lose 20% of its customers annually. b. There is an 80 percent probability that a firm will acquire 20 new customers annually. c. 80 percent of the firm’s expenses are derived from 20 percent of its customers. d. 80 percent of the firm’s revenue is derived from 20 percent of its customers. |
d. 80 percent of the firm’s revenue is derived from 20 percent of its customers. |
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Which of the following accurately describes the 80:20:120 rule?Select one: a. 80 percent of the firm’s revenue is derived from 20 percent of its customers, which provides 120% of the firm’s profits. b. There is an 80 percent probability that a firm will lose 20% of its customers annually, leading to 120% in losses. c. There is an 80 percent probability that a firm will acquire 20 new customers annually, resulting in 120% of the firm’s profits. d. 80 percent of the firm’s expenses are derived from 20 percent of its customers, which provides 120% of the firm’s losses. |
a. 80 percent of the firm’s revenue is derived from 20 percent of its customers, which provides 120% of the firm’s profits. |
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Which of the following approaches for acquiring customers is most commonly used among general medical practitioners?Select one: a. Churning activities b. Firm and business unit acquisitions c. Affiliations d. Independent marketing activities |
c. Affiliations |
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Which of the following is a NEW way in the changing view of optimizing shareholder value?Select one: a. Products are at the heart of the firm’s decision making b. Measure customer profitability c. Measure product profitability d. Firms should attract, retain, and grow all customers |
d. Firms should attract, retain, and grow all customers |
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Which of the following is NOT mentioned in the text as a major approach for acquiring customers?Select one: a. Independent marketing activities b. Churning activities c. Affiliations d. Firm and business unit acquisitions |
b. Churning activities |
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Which of the following is NOT mentioned in the text as a major option for addressing low-profit or unprofitable customers?Select one: a. Review the current way in which the firm interfaces with its customers. b. Pass the customer over to distributors or contract sales forces. c. Fire the customer. d. All selections are viable options for addressing low-profit or unprofitable customers. |
d. All selections are viable options for addressing low-profit or unprofitable customers. |
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Which of the following is NOT mentioned in the text as a specific benefit from a reward program?Select one: a. Stimulates loyal customers to spread positive word of mouth. b. The firm gains insight into customer behavior. c. Encourages loyal customers to spend more with the firm. d. Makes loyal customers more price-sensitive. |
d. Makes loyal customers more price-sensitive. |
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Which of the following shows the correct formula for calculating customer lifetime value?Select one:a. CLV = r + m/(1+d-r) b. CLV = r * d/(1+m-r) c. CLV = d * r/(1+m-r) d. CLV = m * r/(1+d-r) |
d. CLV = m * r/(1+d-r) |
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Which of the following statements is TRUE?Select one: a. If sales revenues are less than costs, the firm earns a profit. b. If sales revenues are greater than costs, the firm earns a profit. c. If costs are greater than sales revenue, the firm earns a profit. d. All of the statements are incorrect. |
b. If sales revenues are greater than costs, the firm earns a profit. |
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Which of the following statements is TRUE?Select one:a. As the retention rate increases, the steady-state market share increases. b. There is no correlation between the retention rate and steady-state market share. c. As the retention rate increases, the steady-state market share decreases. d. As the retention rate decreases, the steady-state market share increases. |
a. As the retention rate increases, the steady-state market share increases. |
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Which of the following statements is TRUE?Select one: a. Retaining current customers cost 50 percent more than acquiring new customers. b. Retaining current customers is generally more costly than acquiring new customers. c. Retaining current customers is generally less costly than acquiring new customers. d. There is no difference in the cost of retaining current customers and acquiring new customers. |
c. Retaining current customers is generally less costly than acquiring new customers. |
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Working through third parties like distributors and selling agents is an example of which of the following approaches for acquiring customers?Select one: a. Channel strategies b. Independent marketing activities c. Churning activities d. Firm and business unit acquisitions |
a. Channel strategies |
