Question 1

The goal of value differentiation is:

Accepted Answer

A)  historical understanding 
B)  measuring customer lifetime value 
C)  a predictive plan of action 
D)  increasing actual value 
A)  historical understanding 
B)  measuring customer lifetime value 
C)  a predictive plan of action 
D)  increasing actual value C

Question 2

Define the following ways of measuring customer value: actual value, unrealized potential value, current/short-term value, long-term value, and customer lifetime value. How do these different measurements relate to each other, where do they overlap, and how do they differ?

Accepted Answer

Customer value can be measured in various ways, each providing a different perspective on the value a customer brings to a business.

1. Actual value: This refers to the current value that a customer brings to a business through their purchases and interactions. It is a tangible measure of the customer's worth based on their current behavior and transactions.

2. Unrealized potential value: This measures the value that a customer could bring to a business if they were to fully engage with the products or services offered. It takes into account the customer's potential to make larger or more frequent purchases if they were to become more loyal or engaged.

3. Current/short-term value: This measures the immediate value that a customer brings to a business within a specific time frame, such as a month or a quarter. It focuses on the short-term impact of the customer's transactions and interactions.

4. Long-term value: This measures the value that a customer is expected to bring to a business over an extended period, taking into account their potential for repeat purchases, referrals, and loyalty over time.

5. Customer lifetime value (CLV): This is a comprehensive measure that takes into account the total value that a customer is expected to bring to a business over the entire duration of their relationship. It considers not only the customer's current and potential value, but also their long-term loyalty and engagement with the business.

These different measurements of customer value are related in that they all seek to quantify the worth of a customer to a business. They overlap in the sense that they all consider the potential value of a customer in addition to their current transactions. However, they differ in terms of the time frame they focus on and the depth of their analysis. Actual value and short-term value focus on immediate transactions, while unrealized potential value, long-term value, and CLV take a more holistic and long-term view of the customer's value. Overall, these measurements provide a comprehensive understanding of the different aspects of customer value and help businesses make informed decisions about customer acquisition, retention, and engagement strategies.

Question 3

Under what conditions should a customer-strategy enterprise consider firing an unprofitable customer? Describe a scenario in which this is done well.

Accepted Answer

A customer-strategy enterprise should consider firing an unprofitable customer when the cost of servicing that customer outweighs the revenue they bring in. This could be due to high maintenance costs, frequent complaints, or a lack of potential for future business growth.

One scenario in which this is done well is when a software company identifies a small business customer who consistently requires extensive technical support, but only pays for a basic subscription. Despite efforts to upsell and provide additional services, the customer continues to be unprofitable. After careful analysis, the company decides to part ways with the customer, freeing up resources to focus on more profitable clients. This decision ultimately leads to improved overall profitability and customer satisfaction for the company.

Question 4

RFM (recency, frequency, and monetary value) is a useful proxy for:

Accepted Answer

A)  actual value 
B)  potential value 
C)  long-term value 
D)  customer lifetime value 
A)  actual value 
B)  potential value 
C)  long-term value 
D)  customer lifetime value

Question 5

According to the Pareto principle:

Accepted Answer

A)  80% of customers produce 20% of the company's business. 
B)  Customer value is best represented by a bell curve. 
C)  Customer value is best represented by a log-normal distribution curve. 
D)  The differences in customer value are similar to the differences in human height. 
A)  80% of customers produce 20% of the company's business. 
B)  Customer value is best represented by a bell curve. 
C)  Customer value is best represented by a log-normal distribution curve. 
D)  The differences in customer value are similar to the differences in human height.

Question 6

The two fundamental differences between customers are:

Accepted Answer

A)  behaviors and attitudes 
B)  value and needs 
C)  behaviors and value 
D)  demographics and attitudes 
A)  behaviors and attitudes 
B)  value and needs 
C)  behaviors and value 
D)  demographics and attitudes

Question 7

The value a customer could create for the enterprise, if the enterprise made the right offerings at the right time, is:

Accepted Answer

A)  actual value 
B)  potential value 
C)  short-term value 
D)  long-term value 
A)  actual value 
B)  potential value 
C)  short-term value 
D)  long-term value

Question 8

The pharmaceutical industry discovered high referral value in:

Accepted Answer

A)  key opinion leaders 
B)  public sector employees 
C)  college students 
D)  clients in financial distress 
A)  key opinion leaders 
B)  public sector employees 
C)  college students 
D)  clients in financial distress

Question 9

From the customer's perspective, potential value depends upon:

Accepted Answer

A)  current product or service offering 
B)  customer behavior 
C)  customer trajectory 
D)  customer need 
A)  current product or service offering 
B)  customer behavior 
C)  customer trajectory 
D)  customer need

Question 10

The customer-strategy enterprise will focus on growing the following customer value categories:

Accepted Answer

A)  MVC and BZs 
B)  MVC and MGC 
C)  low-maintenance customers and MVC 
D)  super-growth customers and MGC 
A)  MVC and BZs 
B)  MVC and MGC 
C)  low-maintenance customers and MVC 
D)  super-growth customers and MGC

Question 11

A customer's contributions to an enterprise could include the following except:

Accepted Answer

A)  product purchases 
B)  service contracts 
C)  using an online service rather than a call center 
D)  word-of-mouth referrals 
A)  product purchases 
B)  service contracts 
C)  using an online service rather than a call center 
D)  word-of-mouth referrals

Question 12

The net present value of the expected future stream of financial contributions for the customer is:

Accepted Answer

A)  customer lifetime value 
B)  actual value 
C)  long-term value 
D)  potential value 
A)  customer lifetime value 
B)  actual value 
C)  long-term value 
D)  potential value

Question 13

How do "super-growth customers" present both pitfall and promise to a customer-strategy enterprise? Describe four strategies a company could profitably apply to dealing with these tough customers.

Accepted Answer

"Super-growth customers" can present bot

Question 14

Consider the five customer value categories discussed in the chapter. To maintain an ideal mix of customers, what strategy should a company apply to each category?

Accepted Answer

The five customer value categories discu

Question 15

A customer's value to the enterprise is a function of the profit the customer generates:

Accepted Answer

A)  in the past 
B)  in the present 
C)  in the future 
D)  all of the above 
A)  in the past 
B)  in the present 
C)  in the future 
D)  all of the above

Question 16

From the enterprise's perspective, unrealized potential value depends upon all of the following except:

Accepted Answer

A)  business with competitor 
B)  additional relevant product lines 
C)  referrals 
D)  current product or service usage 
A)  business with competitor 
B)  additional relevant product lines 
C)  referrals 
D)  current product or service usage

Question 17

Once we identify customers, a customer-strategy enterprise will differentiate them in order to:

Accepted Answer

A)  treat different customers differently 
B)  increase customers' actual value and decrease potential value 
C)  get an exact measurement of customers' LTV 
D)  acquire as many new customers as possible 
A)  treat different customers differently 
B)  increase customers' actual value and decrease potential value 
C)  get an exact measurement of customers' LTV 
D)  acquire as many new customers as possible

The goal of value differentiation is:

Define the following ways of measuring customer value: actual value, unrealized potential value, current/short-term value, long-term value, and customer lifetime value. How do these different measurements relate to each other, where do they overlap, and how do they differ?

Under what conditions should a customer-strategy enterprise consider firing an unprofitable customer? Describe a scenario in which this is done well.

RFM (recency, frequency, and monetary value) is a useful proxy for:

According to the Pareto principle:

The two fundamental differences between customers are:

The value a customer could create for the enterprise, if the enterprise made the right offerings at the right time, is:

The pharmaceutical industry discovered high referral value in:

From the customer's perspective, potential value depends upon:

The customer-strategy enterprise will focus on growing the following customer value categories:

A customer's contributions to an enterprise could include the following except:

The net present value of the expected future stream of financial contributions for the customer is:

How do "super-growth customers" present both pitfall and promise to a customer-strategy enterprise? Describe four strategies a company could profitably apply to dealing with these tough customers.

Consider the five customer value categories discussed in the chapter. To maintain an ideal mix of customers, what strategy should a company apply to each category?

A customer's value to the enterprise is a function of the profit the customer generates:

From the enterprise's perspective, unrealized potential value depends upon all of the following except:

Once we identify customers, a customer-strategy enterprise will differentiate them in order to:

Evolution of Relationships With Customers and Strategic Customer Experiences

The Thinking Behind Customer Relationships That Leads to Good Experiences

Customer Relationships: Building Blocks of IDIC and Trust

Identifying Customers

Differentiating Customers by Their Needs

Interacting With Customers: Customer Collaboration Strategy

Customer Insight, Dialogue, and Social Media

Privacy and Customer Feedback

The Payoff of IDIC: Using Mass Customization to Build Learning Relationships

Optimizing Around the Customer: Measuring the Success of Customer-Based Initiatives and the Customer-Centric Organization

Using Customer Analytics to Build the Success of the Customer-Strategy Enterprise

Organizing and Managing the Profitable Customer-Strategy Enterprise, Part 1

Organizing and Managing the Profitable Customer-Strategy Enterprise, Part 2

Future proofing the Customer-Centric Organization

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Exam 5: Differentiating Customers by Value: Some Customers Are Worth More Than Others

The goal of value differentiation is:

Define the following ways of measuring customer value: actual value, unrealized potential value, current/short-term value, long-term value, and customer lifetime value. How do these different measurements relate to each other, where do they overlap, and how do they differ?

Under what conditions should a customer-strategy enterprise consider firing an unprofitable customer? Describe a scenario in which this is done well.

RFM (recency, frequency, and monetary value) is a useful proxy for:

According to the Pareto principle:

The two fundamental differences between customers are:

The value a customer could create for the enterprise, if the enterprise made the right offerings at the right time, is:

The pharmaceutical industry discovered high referral value in:

From the customer's perspective, potential value depends upon:

The customer-strategy enterprise will focus on growing the following customer value categories:

A customer's contributions to an enterprise could include the following except:

The net present value of the expected future stream of financial contributions for the customer is:

How do "super-growth customers" present both pitfall and promise to a customer-strategy enterprise? Describe four strategies a company could profitably apply to dealing with these tough customers.

Consider the five customer value categories discussed in the chapter. To maintain an ideal mix of customers, what strategy should a company apply to each category?

A customer's value to the enterprise is a function of the profit the customer generates:

From the enterprise's perspective, unrealized potential value depends upon all of the following except:

Once we identify customers, a customer-strategy enterprise will differentiate them in order to:

Evolution of Relationships With Customers and Strategic Customer Experiences

The Thinking Behind Customer Relationships That Leads to Good Experiences

Customer Relationships: Building Blocks of IDIC and Trust

Identifying Customers

Differentiating Customers by Their Needs

Interacting With Customers: Customer Collaboration Strategy

Customer Insight, Dialogue, and Social Media

Privacy and Customer Feedback

The Payoff of IDIC: Using Mass Customization to Build Learning Relationships

Optimizing Around the Customer: Measuring the Success of Customer-Based Initiatives and the Customer-Centric Organization

Using Customer Analytics to Build the Success of the Customer-Strategy Enterprise

Organizing and Managing the Profitable Customer-Strategy Enterprise, Part 1

Organizing and Managing the Profitable Customer-Strategy Enterprise, Part 2

Future proofing the Customer-Centric Organization

Filters