Test Bank ― Chapter 12 Page 1
Essentials of Services Marketing, 2nd Edition
Jochen Wirtz, Patrica Chew and Christopher Lovelock
Chapter 12
Managing Relationships and Building Loyalty
GENERAL CONTENT
Multiple Choice Questions
1. Which of the following is NOT one of the advantages to incremental profits of a loyal
customer?
a. Profit from increased purchases.
b. Profit from decreased advertising.
c. Profit from reduced operating costs.
d. Profit from referrals to other customers.
e. Profit from price premiums.
2. In the worksheet for calculating customer lifetime value, sources of annual revenues
include all EXCEPT _____________.
a. Annual account fee
b. sales
c. service fees
d. value of referrals
e. account management
3. Steps to building a foundation of loyalty include all EXCEPT _____________.
a. delivering customer satisfaction
b. delivery service quality
c. segmenting the market to match customer needs and firm capabilities
d. acquiring customers who fit the core value proposition
e. managing the customer base through effective tiering
4. The wheel of loyalty is composed of which of the following three main components?
a. Create loyalty bonds; deliver quality service; segment the market
b. Create loyalty bonds; build higher level bonds; deliver quality service
c. Build a foundation for loyalty; create bundling; build higher level bonds
d. Build a foundation for loyalty; create loyalty bonds; reduce churn drivers
e. Create loyalty bonds; understand customer value; understand service value
Essentials of Services Marketing, 2nd Edition
Jochen Wirtz, Patrica Chew and Christopher Lovelock
5. Firms should not assume that the “right customers” are always the ___________.
a. ones that are easily delighted
b. high spenders
c. price sensitive customers
d. average income earners
e. least costly to acquire
6. Which of the following is NOT one of the four customer tiers discussed by Zeithaml,
Rust, and Lemon?
a. Platinum
b. Gold
c. Bronze
d. Iron
e. Lead
7. Which of the following are the three main zones of the satisfaction-loyalty
relationship?
a. Direction; institution; affluence
b. Defection; indifference; affection
c. Detection; elimination; subversion
d. Detection; affluence; rejection
e. Direction; intention; rejection
8. Which of the following is NOT one of the strategies for developing loyalty bonds with
customers?
a. Deepening the relationship
b. Lag-based bonds
c. Social bonds
d. Customization bonds
e. Structural bonds
9. Which of the following is NOT one of the key strategies used to reduce customer
defections?
a. Eliminate nuisance customers.
b. Address key churn drivers.
c. Implement effective complaint handling and service recovery procedures.
d. Increase switching costs.
e. Analyze customer defections and monitor declining accounts.
Essentials of Services Marketing, 2nd Edition
Jochen Wirtz, Patrica Chew and Christopher Lovelock
10. The key questions to ask when defining a firm’s customer relationship strategy
include all EXCEPT _____________.
a. What is the increase in profit from increase the share-of-wallet with our current
customers?
b. How much customization or one-to-one marketing and service delivery is suitable
and profitable?
c. How will top management feel about our strategy?
d. How should our value proposition change to increase customer loyalty?
e. How much time and resources can we provide to CRM right now?
True/False
11. Defection describes customers who stop buying from a company and transfer their
brand affinity to another supplier.
12. In the B2B context, the smaller firms as a group have a lot of bargaining power.
13. Customers remain loyal to a firm because they experience relational benefits.
14. Most people can think of dozens of service firms they truly like and where they are
committed to going back to.
15. Special treatment benefits include being known by name by the service provider.
16. Good relationships start with a good fit between customer needs and company
capabilities.
17. Successful customer relationships cannot be built if a firm is selective about the
segments they target.
18. Many service firms put too much emphasis on value without enough consideration of
the number of customers they will serve.
Essentials of Services Marketing, 2nd Edition
Jochen Wirtz, Patrica Chew and Christopher Lovelock
19. The lead customer tier tends to generate moderate revenue, but only a small amount
of business.
20. The two ends of the customer satisfaction/loyalty relationship are terrorist and
apostle.
Short Answer
21. Define loyalty in a service context.
22. Why do firms benefit from a price premium with loyal customers?
23. What are the three clusters of benefits that customers derive from relationships with
the firm?
24. Describe the “Iron” customer segment discussed by Zeithaml, Rust, and Lemon.
25. Explain what a “structural bond” means.
Test Bank ― Chapter 12 Page 5
Essay
26. Describe the wheel of loyalty.
27. Discuss the framework of the five key processes involved in a CRM strategy.
Test Bank ― Chapter 12 Page 6
Essentials of Services Marketing, 2nd Edition
Jochen Wirtz, Patrica Chew and Christopher Lovelock
APPLICATION CONTENT
Multiple Choice Questions
28. Vanguard’s success is measured by which of the following?
a. Low redemption rates
b. High redemption rates
c. Low customer turnover
d. High customer turnover
e. Portfolio stability
29. Which of the following is NOT an aspect of ING Direct’s no-frills strategy?
a. High interest rates
b. Offers only a handful of basic products
c. Lures low-maintenance customers
d. Firing customers who don’t fit the profile
e. Increased contact with the bank
30. Common CRM applications include all of the following EXCEPT _____________.
a. Data collection
b. Marketing automation
c. Data entry
d. Sales force automation
e. Finance automation
31. Which of the following is NOT an example of common CRM applications?
a. Data collection
b. Data analysis
c. Market reinvestment
d. Sales force automation
32. Common failures in CRM implementation include all of the following EXCEPT
_____________.
a. employee enthusiasm about CRM
b. inadequate support from top management.
c. inadequate understanding of customer lifetime value
d. lack of coordination
e. failure to reengineer business processes
Test Bank ― Chapter 12 Page 7
Essentials of Services Marketing, 2nd Edition
Jochen Wirtz, Patrica Chew and Christopher Lovelock
True/False
33. DHL’s less powerful accounts generate significantly lower profitability than their
major accounts.
34. Vanguard Group is very careful about acquiring the right type of customers.
35. ING Direct could be called the fast-food model of consumer banking because it is
about as no-frills as it gets.
36. Customer satisfaction (based on the ACSI) is highly related to the stock price of
individual firms.
37. Part of British Airways’ strategy is that customers can earn BA points and air miles
on other airlines.
Short Answer
38. What did DHL find out about its large and small accounts?
39. Describe how Vanguard Group keeps its costs down to attract the right type of
customers.
40. Give an example of a firm discussed in the chapter that successfully built a strategy
on serving customer segments that were neglected by established players that didn’t
perceive them as sufficiently “valuable.”
41. Describe the difference between miles and points on British Airways.
42. Explain how AOL got itself into legal trouble with poor churn management.
Essay
43. Discuss how Vanguard Group’s pricing is set up to reward the right kind of
customers.
44. Discuss how tiering helps a leading U.S. market research agency better understand
its customers.
Essentials of Services Marketing, 2nd Edition
Jochen Wirtz, Patrica Chew and Christopher Lovelock
45. Discuss the benefits offered by British Airways to its Gold tier members.