Module 6: Customer Relationships Quiz

Which is the best example of the proper use of the on-time in full (OTIF) metric? Production activity control produces to stock at an 80 percent OTIF rate. A salesperson quotes a customer with a 14-day OTIF promise for as many units as they care to order. A carrier is charged a fee if its OTIF goes below 90 percent. A supplier delivers some goods early to improve its "poor" OTIF rating.

A carrier is charged a fee if its OTIF goes below 90 percent. Rationale The APICS Dictionary, 16th edition, defines on-time in full (OTIF) as, "a delivery scoring system in which a target delivery goal, usually expressed as a percentage, is set, and the deliverer tries to meet that delivery goal fully and by the delivery date.

Which of the following would besthelp marketing professionals plan marketing programs, including program launch, scheduling of activities, continuous performance measurement, and response management? Opportunity management Order/provisioning system Account management Campaign management

Campaign management Rationale Campaign management automates the campaign process through various tools such as customer intelligence and data extraction, campaign definition, detailed campaign planning and program launch, scheduling of activities, continuous performance measurement, and response management.

When monitoring lead times, which of the following is most directly related to a customer's required level of safety stock? Consistency Speed of performance Flexibility Malfunction recovery

Consistency Rationale Greater value is typically placed on consistency rather than speed of service, because consistency has a direct impact on the customers' ability to conduct their activities. For example, if cycles vary, then a customer must carry safety stock to ensure against possible late delivery, with the overall degree of variability directly impacting safety stock requirements.

Which of the following tools is frequently used to identify the wants and needs of customers with specific demographics? Product profiling Customer focus groups Customer segmentation Market targeting

Customer focus groups Rationale The APICS Dictionary, 15th edition, describes a focus group as a "set of people who are interviewed together for the purpose of collecting marketing data." This tool is used for identifying the wants and needs of customers.

Which of the following describes a vulnerable customer? Customer to whom the competition has been selling intensively Customer who owns one of the firm's products that is becoming obsolete Customer who is segmented into a low-value group and offered few incentives Customer who is about to discontinue service or stop purchasing the product

Customer who is about to discontinue service or stop purchasing the product Rationale The most accurate answer is that a vulnerable customer is one who is about to stop being a customer. This may be due to factors described in some of the incorrect choices. A vulnerable customer may perceive little value in the relationship, may have developed little loyalty, and may be willing to try a competitor. A customer with an obsolete product who does not receive customer care may soon become vulnerable.

A customer relationship management (CRM) program is which of the following? Sequential Cyclical Linear An event

Cyclical The CRM business cycle is cyclical and involves setting CRM goals for a target customer, acquiring the customer, and fulfilling business terms for the customer, with the cycle starting again by setting new goals for the customer.

Which of the following is an example of a loyalty program? Free shipping for high-volume customers "Buy one, get two" offer Introductory rates Customer profiling system

Free shipping for high-volume customers Rationale A loyalty program simultaneously rewards repeat or high-value customers and encourages continued business through special incentives.

In the development stage of customer relationship management (CRM), customer ownership has which of the following characteristics? Involvement of key customers in crafting the product or service Lack of partnership and mutual investment Uncertainty due to incomplete CRM strategy Decreased likelihood of early sales

Involvement of key customers in crafting the product or service Rationale Customer involvement in developing a product or service, as well as a sense of partnership and mutual investment, are key components of customer ownership.

Your organization has been working diligently on improving the customer service scores of its logistics services in order to reach a 100% service level. Is that a good strategy? It's a good strategy, because it will give you an edge over competitors. It's a good strategy if it results in more speedy delivery of products to customers. It's not a good strategy, because it will require more reliance on 3PLs and 4PLs. It's not a good strategy, because the company could incur additional expenses that are counterproductive.

It's not a good strategy, because the company could incur additional expenses that are counterproductive. Rationale In trying to improve its customer service level to 100%, a company could, under normal operating conditions, incur many additional expenses. This is not a good strategy, because it could be financially ruinous.

Which of the following statements about a customer data warehouse (CDW) is correct? Customers are encouraged to access and update their profiles for accuracy. CDWs are maintained as separate entities from a company's customer databases. One-to-one marketing cannot be achieved without using a CDW. CDWs are primarily used as measurement tools.

One-to-one marketing cannot be achieved without using a CDW. Rationale Because it allows a high degree of customization, one-to-one marketing programs cannot be implemented without using a CDW. CDWs are used for a variety of purposes, including segmentation, implementing different offers to customers, analyzing buying behaviors to detect preferences, and supporting strategic decisions, such as the allocation of human resources. They are usually used in conjunction with information from a company's other databases.

A company's objective is to achieve best-in-class customer service performance. Which of the following indicators would be the most effective measure of the company's progress? Order fill rate Item fill rate Line fill rate Value fill rate

Order fill rate Rationale Order fill rate tracks the percentage of orders delivered versus orders requested and so allows the least room for error of the options shown.

Which customer-focused metric is a measure of whether the response is on target and correct so that the customer does not require additional follow-up? Speed of performance Malfunction recovery Response accuracy Response time to inquiries

Response accuracy Rationale Response accuracy is a measure of whether the response is on target and correct so that the customer does not require additional follow-up.

Which of the following aspects of a customer relationship management technology system would be used for channel partner management and pipeline management? Business intelligence Marketing automation Sales force automation Account management

Sales force automation Rationale Sales force automation features include sales force management, channel partner management, lead tracking, and pipeline management.

Which of the following benefits of a customer data warehouse (CDW) can result from the strategic allocation of human and technology resources according to customer channel preferences and purchasing patterns? Strategic marketing Sales productivity One-to-one marketing Channel management

Sales productivity Rationale Sales productivity can be increased by using resources specific to customer channel preferences and purchasing patterns.

In which type of customer segmentation are customers grouped by income? Segmentation by value Segmentation by demographics Segmentation by channel Segmentation by need

Segmentation by demographics Rationale Demographic segmentation groups customers by group characteristics such as age, income, marital status, or family size.

Which is true of the benefits of segmentation? Segmentation benefits the seller but not the buyer. Segmentation can generate a mutual dependency among buyers and sellers. Segmentation continues to group more and more people in larger segments. Segmentation reduces the seller's return on its promotional budget.

Segmentation can generate a mutual dependency among buyers and sellers. Rationale Segmentation benefits organizations by making lifetime customer relationships more likely, because customers feel that the business is meeting their unique needs. This is a mutual dependency/mutual gain relationship.

What can be said of a week when $90,000 worth of garage doors were custom-built and shipped but there were $100,000 worth of customer garage door orders? There is a 10-day lead time for this product. There was a 90% orders-shipped-complete rate. There was a 10% stockout frequency. The customer service ratio was 90%.

The customer service ratio was 90%. Rationale In a make-to-order company, the customer service ratio is usually some comparison of the number of jobs or dollars shipped in a given time period (e.g., a week) and the number of jobs or dollars that were supposed to be shipped in that time period. Here, $90,000 in orders were shipped, but there was $100,000 worth of orders to be produced. $90,000 divided by $100,000 equals .9, or 90%.

Which of the following describes lifetime customers? They are increasingly more expensive for a business to maintain as they increase demands. They have forged a win-win relationship with the business in question. They are common in commodity markets driven by price rather than value. They can increase revenue but have a neutral effect on profit.

They have forged a win-win relationship with the business in question. Rationale Lifetime customers have a win-win relationship with the businesses they frequent. The customers gain greater satisfaction, while the business enjoys decreased marketing costs and increased revenue and profit potential. Lifetime customers are not common in markets competing on price rather than added value.

You are purchasing an item online and receive the following automated message: "Other customers like you have also ordered X. Would you like to learn more about this product now? If so, click here." This is an example of: a win-back program. cross-selling. up-selling. a vulnerable customer program.

cross-selling. Rationale Cross-selling is a customer relationship managementtactic made possible by the accumulation of data about a customer's buying habits. Customers are offered related products in addition to their current purchase.

If an organization with limited staff has a customer relationship management (CRM) system that allows customers to customize a product-service package, the organization should: reserve some fee-based software downloads for their more profitable segments. ensure that future segmentation analysis of unique packages does not result in segments of just one person. reserve some fee-based service representative help for their more profitable segments. provide equal access to all free service offerings for each customer segment.

reserve some fee-based service representative help for their more profitable segments. Rationale When services are either offered for free (but still have an associated cost) or are in finite supply (such as a limited amount of service representative help), the organization may need to offer them only to their more profitable customers to ensure that the product-service package remains profitable and serves to retain profitable, long-term customers.