Exam Quatro

What is the approximate customer lifetime value of a customer that generates $5,000 (on average) of annual sales? Assume a 5% discount rate, a 15% profit margin, and a customer expected lifetime of 5 years.

$3,247

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:

$41,405

One reason CRM programs fail is because:

Firms have diminished efforts to build customer relationships

When CRM applications are available 24/7 on smartphones, tablets, and desktops, this is referred to as:

Continuous connectivity

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

False

Organizations find they must continue to identify and develop innovative ways to _________ customer relationships to maintain a competitive advantage.

Add value to

Firms can safeguard customer information by doing which of the following?

Both A & B

Customer lifetime value is used to segment customers based upon their:

Both current and future profitability

Which of the following allows users to log in to the CRM system, simultaneously, from any Internet-enabled computer or device?

Cloud CRM applications

A firm offers group discount for orders exceeding 15. Two firms are taking advantage of this offer. Sales to Company A averages $15, 000 of annual sales, has a 22% profit margin and an expected lifetime of 8 years. Company B averages $11, 000 of annual sales, has a 25% profit margin and an expected lifetime of 9 years. Which is the more important customer based on the higher expected lifetime value? Assume a 7% discount rate.

Company A because its' NPV = $19,705

A deli offers a packed lunch box group discount for orders exceeding 15. Two firms are taking advantage of this offer. Sales to Company A averages $14, 000 of annual sales, has a 20% profit margin and an expected lifetime of 8 years. Company B averages $10, 000 of annual sales, has a 25% profit margin and an expected lifetime of 10 years. Which is the more important customer based on the higher expected lifetime value? Assume a 7% discount rate.

Company B because its' NPV = $17,558.

A practical independent measure firms can take to improve information security is:

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

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:

Cross-selling

Which of the following are required elements of an effective CRM initiative?

Cross-selling customers after an initial purchase

Companies work very hard to reduce the number of customers who don't return. This customer defection is often referred to as:

Customer churn

Which of the following customer service elements can be classified as an example of posttransaction elements?

Customer service policies

The element of a CRM program in which a customer's lifetime value is calculated is referred to as:

Customer value determination

According to recent research which of the following is NOT one of the top three reasons for customer defections?

Customers like to touch and feel the merchandise

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:

Data warehouse

The four emerging trends in CRM today are:

Ease of use, personal value creation, continuous connectivity, and small data

CRM implementation studies have found a direct relationship between program success and _____________.

Employee involvement

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:

Event-based marketing

All of the following are recommended for designing and implementing a successful CRM program EXCEPT:

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

A customer's lifetime value is calculated by:

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

Why do so many CRM programs fail?

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

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:

Knowledge management system

The use of quick response codes (QR Codes) to retrieve marketing information is a type of:

Mobile Marketing

Your company allows customers to "opt-out" of receiving email advertisements. This is referred to as:

Permission marketing

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:

Post transaction customer service

The element of a CRM program involved with the use of data-mining software and customer behavior analytics is:

Predicting customer behaviors

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:

Sales territory management system

Which of the following is one of the most basic and important activities of CRM?

Segmenting customers

You work for a company that segments customers by demographic information, and then markets specifically to those customers who are located in the Los Angeles area. This is an example of:

Target Marketing

Which of the following is a U.S. law which requires compliance by all firms engaged in handling customer information?

The U.S. Patriot Act

CRM systems today require less training because:

They are designed to be more user-friendly

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

True

When designing and implementing a successful CRM program firms should do all of the following EXCEPT:

Use multiple software systems to handle customer-oriented processes

Multiple stand-alone CRM applications throughout the company can result in

Wasted money and disgruntled customers

According to the textbook, CRM system training should be provided ________________ the implementation process.

before, after, and during

Customer defection (current customer who never returns to do business) is often referred to as:

customer churn

CRM allows organizations to identify which customers have stopped purchasing products or services so that it can target those former customers for future promotions and/or perhaps investigate why they stopped purchasing in the first place. This CRM attribute is called:

customer defection analysis

Which of the following is NOT one of the Seven Rs Rules for customer service?

customer is always "right"

Compatible CRM modules are linked to one centralized database containing all customer information. This is an example of _________________.

data warehousing

Your company asks for customers' birthdates and offers a free meal to celebrate the occasion. This is referred to as:

event-based marketing

Which of the following is a CRM tool which can lead to better customer service by giving sales personnel better access to information on contracts, clients, competitors, regulatory issues and laws, sales promotions, and previous client correspondence?

knowledge management system

You work for a company that segments customers by demographic information and markets specifically to those customers who are college graduates. This is an example of:

target marketing