Chapter 10 Customer Relationship Management

The three inputs for calculating Customer Lifetime Value are Average Annual Sales, Expected Lifetime and Forecasted Profits. a. True b. False

b. False

The online retailer Ecatalog.com has decided to send consumers of the new John Grisham book an e-mail with suggestions for books with similar themes and has also offered them a 20% discount if those suggested books were purchased. This type of marketing/promotion is an example of: a. Cross-selling b. Target marketing c. Clickstream selling d. Segmented selling

a. Cross-selling

Which of the following are required elements of an effective CRM initiative? a. Cross-selling customers after an initial purchase b. Preserving a traditional sales force that communicates with the supply-chain members c. Sending out promotional materials via e-mails and traditional mail to a large random group of a potential customers d. All of these choices are correct

a. Cross-selling customers after an initial purchase

Why do so many CRM programs fail? a. Firms concentrate more on the CRM software instead of taking care of customers b. Because of incompatible information and communication systems c. They take the firm away from concentrating on their key suppliers d. They are so expensive that it is hard to recover the investment

a. Firms concentrate more on the CRM software instead of taking care of customers

According to the text, poor planning is typically the cause of most unsuccessful CRM initiatives. a. True b. False

a. True

cross selling

additional products are sold as the result of an initial purchase

When an organization attempts to offer the right products and services to customers at the right time through the offer of individual promotions tied to specific events like birthdays and anniversaries, this is referred to as: a. Extreme segmentation marketing b. Event-based marketing c. Personal holiday marketing d. Segmented selling

b. Event-based marketing

All of the following are recommended for designing and implementing a successful CRM program EXCEPT: a. Continuous awareness of customers' changing requirements b. Expect employees to 'learn on the job' and adapt their way of working c. Support from the firm's top executives d. Knowledge of the tools available to aid in CRM

b. Expect employees to 'learn on the job' and adapt their way of working

Your top sales executive leaves your company to work for a competitor. Fortunately, all of her notes regarding prior dealings with customers have been captured in a: a. Sales territory management system b. Knowledge management system c. Lead management system d. Sales activity management system

b. Knowledge management system

Which of the following is one of the most basic and important activities of CRM? a. Increasing churn b. Segmenting customers c. Finding customers d. Cross-selling customers

b. Segmenting customers

CRM systems today require less training because: a. The systems don't do as many things as they used to. b. They are designed to be more user-friendly c. Pre-purchase training sessions have become very sophisticated d. All of these choices are correct.

b. They are designed to be more user-friendly

When CRM applications are available 24/7 on smartphones, tablets, and desktops, this is referred to as: a. All-time CRM b. Smart CRM c. Continuous connectivity d. A high-service application

c. Continuous connectivity

A practical independent measure firms can take to improve information security is: a. Do not collect information about their customers b. Eliminate employee internet use at work c. Continuously monitor employee desktop applications, e-mails and phone calls d. None of these choices are correct.

c. Continuously monitor employee desktop applications, e-mails and phone calls

Companies work very hard to reduce the number of customers who don't return. This customer defection is often referred to as: a. Balking b. Revenue Exodus c. Customer churn d. Clickstream defection

c. Customer churn

Users in a company can retrieve and study a large amount of information about consumers by housing that information in a centralized database that is commonly referred to as a: a. Clickstream cloud b. QR code site c. Data warehouse d. Social media site

c. Data warehouse

A customer's lifetime value is calculated by: a. Summing the annual sales of the customer and then dividing by the projected lifetime b. Summing the projected annual profitability of the customer c. Finding the NPV of a customer's projected lifetime profits for the firm d. The firm's MRP system

c. Finding the NPV of a customer's projected lifetime profits for the firm

You are a manager at Sunnydale Appliances. A customer who recently purchased a dishwasher contacts you with a problem and requests warranty information. According to the text, this is an example of: a. Transaction customer service b. Pre transaction customer service c. Post transaction customer service d. Probable customer churn

c. Post transaction customer service

A system which allows sales managers to obtain current information and reporting capabilities regarding each salesperson's activities on each customer's account is referred to as a: a. Knowledge management system b. Lead management system c. Sales territory management system d. Sales activity management system

c. Sales territory management system

Tire manufacturer Firebridge sells tires to retail firm A. Average annual sales for firm A is $55,000. Average profit margin is 15%. The expected lifetime is 10 years. Using a discount rate of 15 percent, calculate the Customer Lifetime Value of firm A and choose the closest answer below: a. $5,500 b. $25,675 c. $38,590 d. $41,405

d. $41,405

Your company allows customers to "opt-out" of receiving email advertisements. This is referred to as: a. Customer preference marketing b. Customer churn c. Event-based marketing d. Permission marketing

d. Permission marketing

segmentation

grouping customers to create specialized communications and offers

targeting

prioritizing and addressing specific customer segments