SCH CHAPTER 10

What is the NPS based on the feedback results below:

0

How much more does finding a new customer cost then keeping an existing customer?

5x

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

b. False

CRM systems can flag customers which slow or stop purchasing. this CMR attribute is called:

Customer defection analysis

A customer's lifetime value is calculated by:

The NPV of a customers projected profits for the firm

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

a true

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. $41,405 b. $38,590 c. $25,675 d. $5,50

a. 41,405

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. a. Company A because its' NPV = $19,705 b. Company A because its' NPV = $17,917 c. Company B because its' NPV = $21,224 d. Company B because its' NPV = $22,349

a. Company A because its' NPV = $19,705

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

a. Continuous connectivity

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

a. 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: a. Cross-selling b. Clickstream selling c. Target marketing 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. Sending out promotional materials via e-mails and traditional mail to a large random group of a potential customers c. Preserving a traditional sales force that communicates with the supply-chain members d. All of these choices are correct.

a. Cross-selling customers after an initial purchase

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:

a. Customer defection analysis

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. Event-based marketing b. Segmented selling c. Personal holiday marketing d. Extreme segmentation marketing

a. Event-based marketing

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

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

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

a. Permission marketing

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:

a. Target marketing

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.

b. $3,247

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

b. Add value to

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

b. 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. Social media site b. Data warehouse c. QR code site d. Clickstream cloud

b. Data warehouse

The four emerging trends in CRM today are: a. Ease of use, competitive strategy, continuous connectivity, and small data b. Ease of use, personal value creation, continuous connectivity, and small data c. Environmental sustainability, personal value creation, continuous connectivity, and small data d. None of these choices are correct.

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

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

b. Event-based marketing

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

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

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

b. Use multiple software systems to handle customer-oriented processes

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

b. Wasted money and disgruntled customers

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.

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

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

c. Data warehousing

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

c. Employee involvement

One reason CRM programs fail is because:

c. Firms have diminished efforts to build customer relationships

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. Sales activity management system b. Knowledge management system c. Sales territory management system d. Lead management system

c. Sales territory management system

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

c. They are designed to be more user-friendly

According to the textbook, CRM system training should be provided ________________ the implementation process. a. Before b. During c. After d. All of these choices are correct.

d. All of these choices are correct.

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

d. 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? a. Multiple-phase cueing system b. Interactive keiretsu system c. Centralized warehousing system d. Cloud CRM applications

d. Cloud CRM applications

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

d. Customer churn

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

d. Customer is always "Right"

The element of a CRM program in which a customer's lifetime value is calculated is referred to as: a. Customer preference determination b. Segmenting customers c. Predicting customer behaviors d. Customer value determination

d. Customer value determination

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

d. Customers like to touch and feel the merchandise

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

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

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?

d. Knowledge management system

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. Lead management system b. Sales activity management system c. Sales territory management system d. Knowledge management system

d. Knowledge management system

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. Probable customer churn c. Pre transaction customer service d. Post transaction customer service

d. Post transaction customer service

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

d. Segmenting customers

All the following are parts of the "seven R's rule" of customer service except:

the right promotions

The purpose of customer commitments is all of the following except: - they say customers expectations - they communicate what you must do to earn the customers business - they can change over time - they set the baseline to measure meeting customer needs

they can change over time