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Customer Relationship Management Chapter 9
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Customer Relationship Management Chapter 9

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Questions and Answers

What is the ultimate outcome of CRM?

  • Increased sales growth
  • Improved customer loyalty
  • Profitability (correct)
  • Competitive advantage

    • What is the outcome of a successful customer-brand relationship?

  • Customers are less committed to the brand
  • The brand is protected from competition (correct)
  • The relationship has a negative effect on profitability
  • Customers are more likely to switch to competitors

    • What is customer loyalty?

  • A deeply held commitment to re-buy or re-patronize (correct)
  • A temporary commitment to re-buy or re-patronize
  • A casual commitment to re-buy or re-patronize
  • A marketing strategy to attract new customers

    • What is the cost of recruiting a new customer compared to keeping a current one?

    <p>$5 to $1</p> Signup and view all the answers

    What is the outcome of improved customer loyalty?

    <p>Increased revenue</p> Signup and view all the answers

    What is a characteristic of a successful customer-brand relationship?

    <p>Close, positive, and two-sided</p> Signup and view all the answers

    What percentage of customers do companies typically lose each year?

    <p>10%</p> Signup and view all the answers

    What can a 5% reduction in customer defection rate lead to?

    <p>A 35% to 95% increase in profits</p> Signup and view all the answers

    What is the result of a successful customer-brand relationship on competition?

    <p>The brand is protected from competition</p> Signup and view all the answers

    How much more does it cost to attract a new customer compared to keeping an existing one?

    <p>5 times</p> Signup and view all the answers

    What is the outcome of a customer-brand relationship on profitability?

    <p>Positive impact on profitability</p> Signup and view all the answers

    What is the ultimate goal of CRM in terms of customer loyalty?

    <p>To increase customer loyalty</p> Signup and view all the answers

    What percentage of customers do companies typically retain each year?

    <p>90%</p> Signup and view all the answers

    What is the benefit of reducing customer defection?

    <p>Increased profits</p> Signup and view all the answers

    What is the cost of keeping a current customer compared to recruiting a new one?

    <p>$1 to $5</p> Signup and view all the answers

    Why is customer retention important?

    <p>Because it is cheaper than acquiring new customers</p> Signup and view all the answers

    What can a company do to reduce customer defection?

    <p>Invest in customer retention strategies</p> Signup and view all the answers

    What is the potential increase in profits from reducing customer defection?

    <p>35% to 95%</p> Signup and view all the answers

    What is the main reason why profit rate increases over the life of retained customers?

    <p>Because of increased purchases, referrals, and price premiums</p> Signup and view all the answers

    What is the outcome of customer loyalty in terms of profit?

    <p>Increased profit</p> Signup and view all the answers

    What is the type of loyalty that focuses on a customer's intentions and attitudes?

    <p>Attitudinal loyalty</p> Signup and view all the answers

    What is the type of loyalty that involves a customer's repeat business and loyalty actions?

    <p>Behavioural loyalty</p> Signup and view all the answers

    What is the type of loyalty that focuses on a customer's perception and beliefs?

    <p>Cognitive loyalty</p> Signup and view all the answers

    What is the main advantage of customer retention in terms of profit?

    <p>Reduced operating costs</p> Signup and view all the answers

    What is the outcome of customer loyalty in terms of customer behaviour?

    <p>Increased repeat business</p> Signup and view all the answers

    What is the classification of customer loyalty into three types?

    <p>Cognitive, Attitudinal, and Behavioural</p> Signup and view all the answers

    Study Notes

    Successful CRM

    • Profitability is the ultimate outcome of CRM, driven by improved sales growth and revenue, and improved customer loyalty.

    Successful CRM - Intimate Relationships

    • A close, positive, and two-sided relationship between a customer and a brand can protect the brand from competitive actions.
    • This relationship can lead to long-term competitive advantage and prevent customers from switching to competitors.
    • The relationship has a positive effect on profitability.

    Loyalty

    • Loyalty is a deeply held commitment to re-buy or re-patronize a shop in the future despite situational influences and marketing efforts.
    • Loyalty programs can increase profits due to increased purchases, referrals, price premiums, and reduced operating costs.

    The Facts about Loyalty

      1. Profit rate increases over the life of retained customers because of increased purchases, referrals, price premiums, and reduced operating costs.

    Outcomes of Loyalty

    • Customer loyalty can be classified into three types: behavioral, attitudinal, and cognitive loyalty.

    The Facts about Loyalty

    • Attracting new customers costs 5 times more than keeping current customers.
    • On average, a company loses 10% of its customers each year.
    • A 5% reduction in customer defection rate can increase profits by 35% to 95% depending on the industry.

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    Description

    This quiz covers the features and outcomes of successful Customer Relationship Management (CRM), customer loyalty, and designing loyalty programs. It also explains the facts about loyalty and the outcomes of customer loyalty.

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