Learning questions ch 5

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TOP 10 Learning Questions for

Chapter 5Creating Customer

Value, Satisfaction, and Loyalty

Maria Nicole Pauline CruzSept. 2, 2010

1. ________ is a person's feelings of pleasure or disappointment that result from comparing performance to expectations

A. AttitudeB. Affect IntensityC. SatisfactionD. DissonanceE. Perceptions

Total Customer Satisfaction

Perceived

performance

satisfaction

Total Customer Satisfaction

• Page 144Satisfaction is a person's feelings of pleasure or disappointment resulting from comparing a product's perceived performance (or outcome) in relation to his or her expectations. If the performance falls short of expectations, the customer is dissatisfied. If the performance matches the expectations, the customer is satisfied. If the performance exceeds expectations, the customer is highly satisfied or delighted

1. ________ is a person's feelings of pleasure or disappointment that result from comparing performance to expectations

A. AttitudeB. Affect IntensityC. SatisfactionD. DissonanceE. Perceptions

2. Customer churn refers to ____

A. customer mixB. customer valueC. customer loyaltyD. customer defectionE. customer anxiety

Customer Churn

• Page 155• It is not enough, however, to attract new customers; the

company must keep them and increase their business. Too many companies suffer from high customer churn—high customer defection. It is like adding water to a leaking bucket...

• Unfortunately, much marketing theory and practice centers on the art of attracting new customers, rather than on retaining and cultivating existing ones. The emphasis traditionally has been on making sales rather than building relationships; on pre-selling and selling rather than caring for the customer afterward.

2. Customer churn refers to ____

A. customer mixB. customer valueC. customer loyaltyD. customer defectionE. customer anxiety

3. Modern customer-oriented organization have these except

A. Front-line peopleB. CustomersC. ProductsD. Top managementE. Middle management

Modern Customer-Oriented Organization

Customer

Modern Customer-Oriented Organization

Managers who believe the customer is the company's only true "profit center" consider the traditional organization chart—a pyramid with the president at the top, management in the middle, and front-line people and customers at the bottom—obsolete. Successful marketing companies invert the chart

3. Modern customer-customer oriented organization have these except

A. Front-line peopleB. CustomersC. ProductsD. Top managementE. Middle management

4. All of these measure customer satisfaction except

A. Data miningB. Periodic surveysC. Customer loss rateD. Mystery shoppersE. Competitive performance reports

Measuring Satisfaction

• Many companies arc systematically measuring customer satisfaction and the factors shaping it.

• A company would be wise to measure customer satisfaction regularly because one key to customer retention is customer satisfaction. A highly satisfied customer generally stays loyal longer, buys more as the company introduces new products and upgrades existing products, talks favorably about the company and its products, pays less attention to competing brands and is less sensitive to price, offers product or service ideas to the company, and costs less to serve than new customers because transactions are routine.

4. All of these measure customer satisfaction except

A. Data miningB. Periodic surveysC. Customer loss rateD. Mystery shoppersE. Competitive performance reports

5. Which of the following is true?

A. A profitable customer over time yields a revenue stream equal to the company's cost stream.

B. A profitable customer over time yields a revenue stream more than the company's cost stream.

C. An uprofitable customer over time yields a revenue stream less than the company's cost stream.

D. A profitable customer over time yields a revenue stream less than the company's cost stream.

E. An uprofitable customer over time yields a revenue stream more than the company's cost stream.

Profitable Customer

Cost of Attracting Cost of Selling Cost of servicing

Customer Lifetime

Profitable Customer

• Page 149• A profitable customer is a person, household, or

company that over time yields a revenue stream that exceeds by an acceptable amount the company's cost stream of attracting, selling, and servicing that customer. Note that the emphasis is on the lifetime stream of revenue and cost, not on the profit from a particular transaction. Customer profitability can be assessed individually, by market segment, or by channel.

5. Which of the following is true?

A. A profitable customer over time yields a revenue stream equal to the company's cost stream.

B. A profitable customer over time yields a revenue stream more than the company's cost stream.

C. An uprofitable customer over time yields a revenue stream less than the company's cost stream.

D. A profitable customer over time yields a revenue stream less than the company's cost stream.

E. An uprofitable customer over time yields a revenue stream more than the company's cost stream.

6. Which of the following is false?

A. The average company loses 30% of its customers every year.

B. The first step in reducing the customer defection rate is to define and measure retention rate.

C. Activity-based costing is an important part of customer profitability analysis.

D. A customer mailing list contains business customers' name, address, and telephone numbers.

E. Acquisition of customers can cost five times more than retaining current custoemrs.

Customer Retention/Defection

• Page 156• Here are some interesting facts that bear on customer

retention:1. Acquiring new customers can cost five times more than the

costs involved in satisfying and retaining current customers. It requires a great deal of effort to induce satisfied customers to switch away from their current suppliers.

2. The average company loses 10 percent of its customers each year.

3. A 5 percent reduction in the customer defection rate can increase profits by 25 percent to 85 percent, depending on the industry.

4. The customer profit rate tends to increase over the life of the retained customer.

6. Which of the following is false?

A. The average company loses 30% of its customers every year.

B. The first step in reducing the customer defection rate is to define and measure retention rate.

C. Activity-based costing is an important part of customer profitability analysis.

D. A customer mailing list contains business customers' name, address, and telephone numbers.

E. Acquisition of customers can cost five times more than retaining current customers.

7. Forms with questions that measure satisfaction is an example of

A. HandoutsB. SurveysC. Performance reportsD. DatabasesE. CRMs

Measures of Satisfaction

Surveys

• Page 146

• Periodic surveys can track customer satisfaction directly. Respondents can also be asked additional questions to measure repurchase intention and the likelihood or willingness to recommend the company and brand to others. Paramount attributes the success of its five theme parks to the thousands of Web-based guest surveys it sends to customers who have agreed to be contacted.

7. Forms with questions that measure satisfaction is an example of

A. HandoutsB. SurveysC. Performance reportsD. DatabasesE. CRMs

8. A bank charging a customer a penalty for a late payment while failing to note that the customer was a major depositor could use a database to _____.

A. avoid serious customer mistakesB. deepen customer loyaltyC. identify prospectsD. reactivate customer purchasesE. decide which customers should

receive a particular offer

Using a database

DATABASE

Prospects

Reactivecustomers

Deepenloyalty

Avoid mistakes

Target offers

Using a database

• In general, companies can use their databases in five ways:

– To identify prospects– To decide which customers should receive a particular offer– To deepen customer loyalty– To reactivate customer purchases– To avoid serious customer mistakes

8. A bank charging a customer a penalty for a late payment while failing to note that the customer was a major depositor could use a database to _____.

9. Data collected by a company's contact center are organized into a _____.

A. Data baseB. Data mineC. Data organizationD. Data systemE. Data warehouse

Data warehouse

DATAWAREHOUSE

Capture

Analyzeinferences

Total CustomerRelationship

Data warehouse

• Page 163-164• These data are collected by the company's contact

center and organized into a dataware-house. Company personnel can capture, query, and analyze the data. Inferences can be drawn about an individual customer's needs and responses. Telemarketers can respond to customer inquiries based on a total picture of the customer relationship.

9. Data collected by a company's contact center are organized into a _____.

A. Data baseB. Data mineC. Data organizationD. Data systemE. Data warehouse

10. A database to generate sales lead aims to

Using the Database

DATABASE

Prospects

Reactivecustomers

Deepenloyalty

Avoid mistakes

Target offers

Using the Database

• Page 164• To identify prospects. Many companies generate sales

leads by advertising their product or service. The ads generally contain a response feature, such as a business reply card or toll-free phone number. The database is built from these responses. The company sorts through the database to identify the best prospects, then contacts them by mail, phone, or personal call in an attempt to convert them into customers.

10. A database to generate sales lead aims to

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