Deck 14: Customer Loyalty and Retention

Question 1

The strategy for cultivating customer loyalty that involves communicating to customers that the firm genuinely cares for their well-being is:

A)developing a proper perspective.
B)setting customer retention goals.
C)staying in touch.
D)building trust through reliability.
E)providing discretionary effort.

Answer 1

C

Question 2

____ refers to focusing the firm's marketing efforts toward the existing customer base.

A)Customer retention
B)Frequency marketing
C)Aftermarketing
D)Relationship marketing
E)Conquest marketing

Answer 2

A

Question 3

The strategy for cultivating customer loyalty that assumes upper management's loyalty to employees will be passed on by employees to customers is:

A)developing a proper perspective.
B)providing discretionary effort.
C)leading through top-down loyalty.
D)building trust through reliability.
E)staying in touch.

Answer 3

C

Question 4

The guarantee that most likely avoids the appearance of a tacky marketing ploy is called a(n):

A)conditional guarantee.
B)implicit guarantee.
C)specific result guarantee.
D)unconditional guarantee.
E)explicit guarantee.

Question 5

The most powerful of all guarantees that promises complete customer satisfaction is the _____ guarantee.

A)conditional
B)implicit
C)specific result
D)unconditional
E)unsolicited

Question 6

Which of the following is NOT an aftermarketing technique?

A)identifying customers and building a customer database
B)measuring customer satisfaction and continuously making improvements based on customer feedback
C)refraining from negative word of mouth advertising
D)maintaining a relationship with the customer after the initial sale
E)establishing formal customer communication programs

Question 7

____ is behavior that goes beyond the call of duty.It involves countless personal touches--little things that distinguish a discrete business transaction from an ongoing relationship.

A)Developing a proper perspective
B)Providing discretionary effort
C)Providing incentives
D)Building trust through reliability
E)Staying in touch

Question 8

Studies have indicated that as much as ____ percent of profits come from long-term customers via profits derived from sales,referrals,and reduced operating costs.

A)95
B)75
C)50
D)35
E)25

Question 9

Federal Express publicly states that it guarantees overnight delivery.This type of guarantee is called a(n) _____ guarantee.

A)conditional
B)implicit
C)specific result
D)unconditional
E)unsolicited

Question 10

____ reflects an emotional attachment as well as a business attachment to the service firm.

A)Customer retention
B)Frequency marketing
C)Aftermarketing
D)Relationship marketing
E)Customer loyalty

Question 11

The strategy for cultivating customer loyalty that involves protecting confidential information and telling the customers the truth,even when it hurts,is:

A)developing a proper perspective.
B)providing discretionary effort.
C)providing incentives.
D)building trust through reliability.
E)staying in touch.

Question 12

____ seeks new customers by offering discounts and developing promotions that encourage new business.

A)Customer retention
B)Frequency marketing
C)Conquest marketing
D)Relationship marketing
E)Aftermarketing

Question 13

Under which conditions is it no longer worthwhile to keep a customer?

A)The account is no longer profitable.
B)Customers are abusive to the point where it lowers employee morale.
C)Contract conditions are no longer being met.
D)Customer demands are beyond reasonable.
E)All of these apply.

Question 14

A guarantee that applies only to specific steps or outputs in the service delivery process is called a(n) _____ guarantee.

A)conditional
B)implicit
C)specific result
D)unconditional
E)unsolicited

Question 15

____ refers to the average dollar amount per sale multiplied by the average number of times customers reorder.

A)Lifetime value of a customer
B)Customer acquisition cost
C)Lifetime profit of a customer
D)Lifetime cost of a customer
E)Customer retention cost

Question 16

The strategy for cultivating customer loyalty that promotes the idea that the company exists to meet the needs and wants of its consumers is:

A)developing a proper perspective.
B)providing discretionary effort.
C)providing incentives.
D)building trust through reliability.
E)staying in touch.

Question 17

An unwritten,unspoken guarantee that establishes an understanding between the firm and its customers is called a(n) _____ guarantee.

A)conditional
B)implicit
C)specific result
D)unconditional
E)unsolicited

Question 18

All of the following statements related to customer retention are true except:

A)One of the key benefits of customer retention is repeat sales.
B)Existing customers are willing to pay more for a firm's services.
C)It costs 3 to 5 times more to keep a customer than to get a new one.
D)Long-term customers tend to have lower maintenance costs.
E)Customer retention often leads to positive referrals.

Question 19

Which of the following is NOT a reason why customer retention has become increasingly important?

A)relative parity among competing products
B)the rising costs of marketing
C)customers are more confident with their service providers
D)domestic markets are stagnant
E)customers are more informed

Question 20

At the macro level,firms engaged in relationship marketing recognize that the marketing activity affects:

A)customer markets.
B)employee markets.
C)supplier markets.
D)internal markets.
E)all of these.

Question 21

The defection management process includes all of the following steps except:

A)Communicate to employees the importance of retaining current customers and the benefitsobtained by reducing defections.
B)Minimize service guarantee payouts.
C)Train employees in defection management.
D)Tie incentives to defection rates.
E)Create switching barriers that discourage defections.

Question 22

The least loyal of any customer type are the _____ defectors.

A)price
B)product
C)service
D)market
E)technological

Question 23

A cargo shipper switches from rail carrier to air transportation.This is an example of a _____ defector.

A)price
B)product
C)service
D)market
E)technological

Question 24

Businesses commonly lose ____ percent of their customers each year.

A)5 to 10
B)15 to 20
C)25 to 30
D)35 to 40
E)45 to 50

Question 25

Bob defected to another service provider due to a friendship that developed through a civic club.Bob is an example of a(n) _____ defector.

A)price
B)organizational
C)service
D)market
E)technological

Question 26

Discuss the differences between an implicit guarantee,a specific result guarantee,and an unconditional guarantee.

Question 27

Discuss the concepts of frequency marketing,relationship marketing,and aftermarketing.

Question 28

All of the following are customer-directed benefits associated with unconditional guarantees except:

A)guarantees that are invoked provide a measurable means of tracking poor service.
B)customers perceive they are getting a better value.
C)the perceived risk associated with the purchase is lower.
D)the consumer perceives the firm to be more reliable.
E)the guarantee helps consumers decide when comparing competing alternatives.

Question 29

A specific result guarantee may appear weak compared to the _____ guarantee.

A)conditional
B)implicit
C)explicit
D)unconditional
E)unsolicited

Question 30

While other defector types are primarily externally driven,these defectors leave as a result of problems with the internal operations of the firm.

A)price defectors
B)product defectors
C)service defectors
D)market defectors
E)technological defectors

Question 31

The most difficult type of defectors to bring back once they leave are the _____ defectors.

A)price
B)product
C)service
D)market
E)technological

Question 32

What is the key to defection management?

A)gathering customer information
B)providing specific instructions above what to do with the information
C)instructing employees in how to react to the information
D)encouraging employees to respond to the information
E)creating a zero defections culture within the firm

Question 33

Define the concepts and explain the relationship between customer loyalty and customer retention.

Question 34

____ are customers who leave due to relocation.

A)Price defectors
B)Product defectors
C)Service defectors
D)Market defectors
E)Technological defectors

Question 35

Experts in the area of guarantees believe that guarantees are most effective for professional service providers under which of the following conditions?

A)Prices are high.
B)The costs of a negative outcome are high.
C)Buyer resistance is high.
D)Brand recognition is difficult to achieve.
E)All of these conditions apply.

Question 36

Discuss the customer defection management process.

Question 37

Although appropriate within the manufacturing sector,which of the following does NOT work well within the service sector?

A)implicit guarantees
B)defection management
C)zero defects model
D)zero defections model
E)conquest marketing

Question 38

All of the following are organization-directed benefits associated with offering unconditional guarantees except:

A)the guarantee forces the firm to focus on the customer's definition of good service.
B)the guarantee states a clear performance goal that is communicated to employees.
C)offering the guarantee forces the firm to examine its entire service delivery system for failure points.
D)the guarantee provides a means to avoid bankruptcy.
E)the guarantee can be a source of pride and provide a motive for team building within the firm.

Question 39

____ is a systematic process that actively attempts to retain customers before they defect.

A)Implicit guarantees
B)Defection management
C)Zero defects model
D)Zero defections model
E)Conquest marketing

Question 40

Under what conditions is it no longer worthwhile to keep a customer?