SCM Chapter 10

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

False

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

True

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. Knowledge management system

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 territory management system

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

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

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

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

A customer's lifetime value is calculated by:

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

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

b. 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:

b. Post transaction customer service

CRM systems today require less training because:

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:

c. Continuous connectivity

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:

c. Cross-selling

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

c. 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:

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:

c. Data warehouse

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:

c. Event-based marketing

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

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

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

c. Segmenting customers

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:

d. $41,405

Why do so many CRM programs fail?

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