CHAPTER 14
MULTIPLE CHOICE QUESTIONS
1. __________ 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
2. __________ focuses the firm’s marketing efforts toward the existing customer
base.
a. customer retention
b. frequency marketing
c. aftermarketing
d. relationship marketing
e. conquest marketing
3. _________ 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
4. Which of the following reasons is not related to 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
5. Studies have indicated that as much as ______ percent of profits come from
long-term customers via derived profits
a. 95
b. 75
c. 50
d. 35
e. 25
6. Which one of the following statements is incorrect?
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.
7. _____ 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. None of the above
8. Credit card companies have found that customer retention leads to:
a. profits from increased purchases and higher balances
b. profits from reduced operating costs
c. profits from referrals
d. profit from price premiums
e. all the above
9. The strategy for cultivating customer loyalty that refers to protecting confidential
information and telling the customers the truth, even when it hurts is:
a. maintaining the proper perspective
b. providing discretionary effort
c. monitoring the service delivery process
d. building trusting
e. remembering the customers between calls
10. The strategy for cultivating customer loyalty that refers to communicate to
customers that the firm genuinely cares for their well-being is:
a. maintaining the proper perspective
b. setting customer retention goals
c. staying in touch
d. building trusting relationships
e. providing discretionary efforts
11. 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. monitoring the service delivery process
d. building trusting relationships
e. remembering the customers between calls
12. The strategy for cultivating customer loyalty that relates to upper management
that is loyal to its employees is:
a. maintaining the proper perspective
b. providing discretionary effort
c. leading through top-down loyalty
d. building trusting relationships
e. remembering the customers between calls
13. __________ is behavior beyond the call of duty. It involves countless personal
touches, little things that distinguish a discrete business transaction from an
ongoing relationship.
a. maintaining the proper perspective
b. providing discretionary effort
c. monitoring the service delivery process
d. building trusting relationships
e. remembering the customers between calls
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14 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 the above
15. Which of the following is an aftermarketing technique?
a. identifying customers and building a customer database
b. measuring customer satisfaction
c. establishing formal customer communication programs
d. maintaining a relationship with the customer after the initial sale
e. all of the above
16. The guarantee that most likely avoids the appearance of a tacky
marketing ploy is called:
a. conditional guarantee
b. implicit guarantee
c. specific result guarantee
d. unconditional guarantee
e. unsolicited guarantee
17. An unwritten, unspoken guarantee that establishes an understanding
between the firm and its customers is called an:
a. conditional guarantee
b. implicit guarantee
c. specific result guarantee
d. unconditional guarantee
e. unsolicited guarantee
18. Federal Express publicly states that it guarantees overnight delivery. This type
of guarantee is called a(n):
a. conditional guarantee
b. implicit guarantee
c. specific result guarantee
d. unconditional guarantee
e. unsolicited guarantee
19. A guarantee that applies only to specific steps or outputs in the service delivery
process is called a(n):
a. conditional guarantee
b. implicit guarantee
c. specific result guarantee
d. unconditional guarantee
e. unsolicited guarantee
20. The most powerful of all guarantees that promises complete customer
satisfaction is the:
a. conditional guarantee
b. implicit guarantee
c. specific result guarantee
d. unconditional guarantee
e. unsolicited guarantee
21. A specific result guarantee may appear weak compared to the:
a. conditional guarantee
b. implicit guarantee
c. explicit guarantee
d. unconditional guarantee
e. unsolicited guarantee
22. Which of the following is not a customer-directed benefit associated with
unconditional guarantees?
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
23. Which of the following is not an organization-directed benefit associated
with offering unconditional guarantees?
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 can be a source of pride and provide a motive for team
building within the firm
e. all the above
24. 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 the above
25. __________ 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
26. Although appropriate within the manufacturing sector, which one of the following
concepts 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
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27. 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
28. __________ are customers who leave due to relocation.
a. price defectors
b. product defectors
c. service defectors
d. market defectors
e. technological defectors
29. Business 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
30. According to the text, the least loyal defector type are:
a. price defectors
b. product defectors
c. service defectors
d. market defectors
e. technological defectors
31. According to the text, the most difficult type of defector to bring back once they
leave are:
a. price defectors
b. product defectors
c. service defectors
d. market defectors
e. technological defectors
32. When some cargo shippers switch form rail carriers to air transportation, this
would be classified as which type of defectors?
a. price defectors
b. product defectors
c. service defectors
d. market defectors
e. technological defectors
33. Customers who defect due to reciprocal buying arrangements with another
firm would be classified as which type of defectors?
a. price defectors
b. organizational defectors
c. service defectors
d. market defectors
e. technological defectors
34. The defection management process includes all of the following steps except:
a. creating a zero defections culture within the firm
b. minimizing service guarantee payouts
c. training employees in defection management
d. tieing incentives to reduce defection rates
e. creating switching barriers that discourage defections
35. 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
SHORT-ANSWER ESSAYS
36. Define the concepts and explain the relationship between customer loyalty and
customer retention.
37. Under what conditions is it no longer worthwhile to keep a customer?
38. Discuss the concepts of frequency marketing, relationship marketing, and
aftermarketing.
39. Discuss the differences between an implicit guarantee, a specific result
guarantee, and an unconditional guarantee.
40. Discuss the customer defection management process.