Learning questions ch 5

TOP 10 Learning Questions for Chapter 5 Creating Customer Value, Satisfaction, and Loyalty Maria Nicole Pauline Cruz Sept. 2, 2010

1. ________ is a person's feelings of pleasure or disappointment that result from comparing performance to expectations Attitude Affect Intensity Satisfaction Dissonance Perceptions

Total Customer Satisfaction Perceived performance satisfaction

Total Customer Satisfaction Page 144 Satisfaction 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

2. Customer churn refers to ____ customer mix customer value customer loyalty customer defection 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.

3. Modern customer-oriented organization have these except Front-line people Customers Products Top management Middle management

Modern Customer-Oriented Organization Customer 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 Front-line people Customers Products Top management Middle management

4. All of these measure customer satisfaction except Data mining Periodic surveys Customer loss rate Mystery shoppers 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.

5. Which of the following is true? A profitable customer over time yields a revenue stream equal to the company's cost stream. A profitable customer over time yields a revenue stream more than the company's cost stream. An uprofitable customer over time yields a revenue stream less than the company's cost stream. A profitable customer over time yields a revenue stream less than the company's cost stream. 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.

6. Which of the following is false? The average company loses 30% of its customers every year. The first step in reducing the customer defection rate is to define and measure retention rate. Activity-based costing is an important part of customer profitability analysis. A customer mailing list contains business customers' name, address, and telephone numbers. 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? The average company loses 30% of its customers every year. The first step in reducing the customer defection rate is to define and measure retention rate. Activity-based costing is an important part of customer profitability analysis. A customer mailing list contains business customers' name, address, and telephone numbers. Acquisition of customers can cost five times more than retaining current customers.

7. Forms with questions that measure satisfaction is an example of Handouts Surveys Performance reports Databases E. CRMs

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.

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

Using a database DATABASE Prospects Reactive customers Deepen loyalty Avoid mistakes Target offers

Using a database Page 164-165 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

9. Data collected by a company's contact center are organized into a _____. Data base Data mine Data organization Data system Data warehouse

Data warehouse DATAWAREHOUSE Capture Query Analyze inferences Total Customer Relationship

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.

10. A database to generate sales lead aims to avoid serious customer mistakes deepen customer loyalty identify prospects reactivate customer purchases decide which customers should receive a particular offer

Using the Database DATABASE Prospects Reactive customers Deepen loyalty 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.

Learning questions ch 5

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Learning questions ch 5