Chapter 21—Customer Relationship Management (CRM)
TRUE/FALSE
1. Customer relationship management (CRM) requires that organizations be organized around customer
segments.
2. To initiate the CRM cycle, a company must first identify customer relationships within the
organization.
3. Data consolidation is an analytical process that compiles actionable data about the purchase habits of a
firm’s current and potential customers.
4. Customer-centric is an internal management philosophy similar to the marketing concept.
5. Empowerment in a CRM environment is normally a process of collecting customer information
through customers’ feedback on products.
6. Janie contacts calls Lands’ End to ask if the company sells pajamas for teenage girls. The customer
service representative who speaks with Janie advises her of the various options. This is an example of
knowledge management.
7. The interaction between a customer and the organization is the foundation on which a CRM system is
built.
8. Web-based interactions are an increasingly popular touch point for customers to communicate with
companies on their own terms.
9. When Amazon.com asks visitors to its Internet site to create wish lists and then invites them to send
the lists to people who may be planning on buying them a present soon, it is relying on Web-based
interactions to help it learn about its customers.
10. Consumers are reluctant to enter information through point-of-sale interactions because of privacy
violation fears.
11. Channel interactions are the relationships a manufacturer has with its distributors.
12. The process of centralizing data in a CRM system is sometimes referred to as the interpolation of
external and internal touch points.
13. For a CRM system to be effective, customer information must be stored in a data matrix.
14. Privacy issues are the primary reason for centralizing data in a CRM.
15. Response lists are especially important in database creation because past behavior is a strong predictor
of future behavior.
16. Database elaboration is the addition of information to customer or prospect records for the purpose of
better describing or better determining the responsiveness of those customers or prospects.
17. Multinational companies often face difficult problems when pulling together internal data about their
customers.
18. Data mining is used to find hidden patterns and relationships in the customer data stored in the data
warehouse.
19. Volvo has a Web site that caters to car enthusiasts who might want to see concept cars evolve into
real-life products. Volvo would likely have used data mining to locate people who were car enthusiasts
and innovators.
20. RFM analysis is used to delete unnecessary or duplicated data.
21. Customer lifetime value analysis shows marketers how much they can spend to acquire new
customers.
22. Through customer segmentation, marketers use some past set of occurrences in order to determine
what the odds are that certain other occurrences—such as a response or purchase—will take place in
the future.
23. A common CRM application is cross-selling other products or services to customers.
24. Through campaign management, all areas of the company participate in the development of programs
targeted to customers.
25. Updating customers periodically about the status of their orders reinforces purchase decisions.
26. The United States has the most restrictive privacy laws in the world.
MULTIPLE CHOICE
1. _____ is a company-wide business strategy designed to optimize profitability, revenue, and customer
satisfaction by focusing on highly defined and precise customer segments.
a.
Organizational optimization
b.
Consumer relationship marketing (CRM)
c.
Total quality management (TQM)
d.
Customer relationship management (CRM)
e.
Market aggregation
2. At its most fundamental level, a CRM approach is no more than:
a.
the relationship cultivated by a salesperson with a customer
b.
a mass marketing approach
c.
a transactional selling approach
d.
a customer satisfaction program
e.
a differentiation strategy
3. The My Coke Rewards program allows consumers to earn reward products and services by registering
points they receive by consuming Coca Cola products. The My Coke Rewards program allows Coca
Cola to collect information about consumers that they can use to optimize profitability, revenue, and
customer satisfaction. The My Coke Rewards program is an example of a(n) _____ program.
a.
organizational optimization
b.
consumer relationship marketing (CRM
c.
total quality management (TQM)
d.
customer relationship management (CRM
e.
market aggregation
4. Using technology provided by Smart Button software, the WNBA’s Los Angeles Sparks have
implemented a new system that gathers information about its best customers, season ticket holders,
and rewards those customers in many ways including free tickets to Sparks home games and cash
prizes. This is an example of a(n) _____ system.
a.
organizational optimization
b.
corporate relationship marketing (CRM)
c.
total quality management (TQM)
d.
customer relationship management (CRM)
e.
call response marketing (CRM)
5. To initiate the CRM cycle, a company must first:
a.
establish marketing objectives
b.
capture relevant customer data on interactions
c.
identify customer relationships with the organization
d.
understand the interactions the company has with current customers
e.
decide on a segmentation strategy
6. While many catalog retailers send out a standard catalog to all potential customers, Land’s End uses
information it has gathered about customers in its CRM system to target the catalog to the individual.
This approach used by Land’s End is an example of the _____ approach.
a.
shotgun
b.
rifle
c.
Square peg, square
d.
Fishing pole
e.
All of these statements can be used to describe the approach used by Land’s End.
7. Customer relationship management is accomplished by all of the following EXCEPT:
a.
offering the lowest prices of all major competitors
b.
organizing the company around customer segments
c.
establishing and tracking customer interactions with the company
d.
fostering customer-satisfying behaviors
e.
linking all processes of the company from its customers through its suppliers
8. Which of the following statements about the CRM cycle is true?
a.
The letters CRM are an acronym for consumer relationship marketing.
b.
The CRM cycle does not affect employees outside the marketing and management
functional areas.
c.
The CRM cycle is continuous and circular with no predefined start or end point.
d.
The CRM cycle takes a simplistic perspective on customers.
e.
All of these statements about the CRM cycle are true.
9. When Burpee Gardening company collects relevant information from customers, such as date of last
communication with the customer, and how often the customer contacts the company, this is an
example of:
a.
establishing marketing objectives
b.
capturing relevant customer data on interactions
c.
identifying customer relationships with the organization
d.
understanding the interactions the company has with current customers
e.
deciding on a segmentation strategy
10. As the second step in the CRM cycle a company must:
a.
establish marketing objectives
b.
captures relevant customer data on interactions
c.
identify customer relationships with the organization
d.
understand the interactions the company has with current customers
e.
decide on a segmentation strategy
11. Which of the following statements about a CRM system is true?
a.
A critical component of a CRM system is the use of the appropriate technology to store
and integrate customer data.
b.
A CRM system operates on the theory that all customers are equally important.
c.
Due to privacy laws, a CRM system only disseminates customer information to those who
are actually in day-to-day contact with customers.
d.
A company using a CRM system must view its customers as bits of data.
e.
All of these statements about a CRM system are true.
12. Once customer data are analyzed and transformed into usable information, the information must be:
a.
implemented
b.
evaluated
c.
leveraged
d.
stored
e.
mined
13. A company that has a(n) _____ customizes its product offerings based on data generated through
interaction between the customer and the company.
a.
ethnocentric perspective
b.
supply-based focus
c.
sales orientation
d.
supply-based focus
e.
customer-centric focus
14. Best Buy instituted a system in all of its stores that customizes their product offerings for the five key
customer segments it has identified: affluent professional males, young entertainment enthusiasts,
upscale suburban moms, families who are practical technology adopters, and small businesses with
less than 20 employees. This focus implies that Best Buy is:
a.
ethnocentric
b.
demand-based
c.
sales-centric
d.
supply-based
e.
customer-centric
15. Customer-centric is an internal management philosophy similar to:
a.
utilitarianism
b.
Herzberg’s theory of motivation
c.
the equity theory
d.
the marketing concept
e.
consumerism
16. Sony wants to build long-lasting relationships by focusingon what satisfies and retains their customers.
For example, Sony’s Playstation Web site is designed to create a community of users who can join
PlayStation Underground where they will “feel like they belong to a subculture of intense gamers.”
Sony evidently:
a.
is sales oriented
b.
has a standardization focus
c.
is ethnocentric
d.
has a customer-centric focus
e.
is product oriented
17. _____ refers to the latitude organizations bestow on their representatives to negotiate mutually
satisfying commitments with customers.
a.
Consumer learning
b.
Customerization
c.
Empowerment
d.
Autonomy
e.
Interaction
18. Best Buy’s Performance Service Plan (PSP) guarantees products against damage and malfunctioning.
All initial purchase contact information is kept in the customer database, along with copies of the PSP.
If a customer calls Best Buy with a problem, the representative will have access to all this information
and can either help the customer or refer him or her to another representative. The availability of this
customer information tends to:
a.
reduce customer calls
b.
empower employees
c.
encourage referrals to other employees
d.
hurt employee morale
e.
increase the need for management supervision
19. In a CRM environment, _____ is defined as the informal process of collecting customer information
through customer contacts and feedback on product and service performance.
a.
leveraging
b.
knowledge management
c.
interaction
d.
data mining
e.
learning
20. _____ is the process by which learned information from customers is centralized and shared in order to
enhance the relationship between customers and the organization.
a.
Knowledge management
b.
Learning
c.
Database marketing
d.
Interactive marketing
e.
Information marketing
21. When Sony Playstation users want to access amenities on the Sony web site, they are required to log in
and supply information such as their name, e-mail address, and birth date. They are also given the
opportunity to complete a survey that captures much more information about the person and their
gaming habits. Sony gathers this information and makes it available internally to better serve the
customer. This is an example of a company using:
a.
learned research
b.
stimulus/response marketing
c.
knowledge management
d.
sales-oriented marketing
e.
motivational research
22. A(n) _____ is the point at which a customer and a company representative exchange information and
develop learning relationships.
a.
social contact
b.
interaction
c.
empowering moment
d.
equilibrium point
e.
transactional dyad
23. Zappos is an online shoe and apparel retailer that promotes the highest quality customer service by
maintaining the importance of each _____, the point at which customer and store personnel exchange
information and develop learning relationships.
a.
moment of truth
b.
intervention
c.
data capture
d.
response situation
e.
interaction
24. Following the customer-centric approach, an interaction can occur through:
a.
a salesperson
b.
a tweet or Facebook posting
c.
a phone call
d.
a survey response
e.
all of the above
25. In a CRM system, _____ are all areas of the business where customers have contact with the company
and data may be gathered and used to guide and direct the decision making within that business unit.
a.
touch points
b.
focus areas
c.
data mining
d.
information search periods
e.
observational points
26. Apple, Inc. has stores, a Web site, and a toll-free phone number where consumers can provide valuable
information to the company in developing a CRM system. All these possible areas of the company
where consumers can communicate with the business are called:
a.
touch points
b.
focus areas
c.
data mining
d.
information search periods
e.
experimental points
27. The Detroit Tigers, a Major League Baseball team, used customer satisfaction surveys of season ticket
holders to determine why the number of season ticket holders was declining. This survey was an
example of a(n):
a.
touch point
b.
focus area
c.
data search
d.
information recognizance
e.
observational point
28. Les Ailes de la Mode, a Quebec retail store that promotes the highest quality customer service, has not
only established itself as a top retailer in the province, but also as a credit card and point program
company, a cataloger and Internet seller, and even a publisher. Through gathering customer
information for its credit cards and point program, through catalog and Internet orders, and through
subscriptions to its publications, Les Ailes de la Mode has created several different:
a.
focus areas
b.
touch points
c.
interrelationship promotions
d.
distribution channels
e.
sources of distribution information
29. Which of the following would be an example of “social” CRM?
a.
Placing a phone call to a local department store
b.
Leaving a comment on a company’s blog
c.
Mailing a survey card back to an organization
d.
Telling a friend about your experience with an online retailer
e.
All of the above are examples of “social” CRM
30. Hudson’s Bay Company in Canada operates The Bay, Zellers, Home Outfitters, and hbc.com. At each
of its stores and its Web site, it gives HBC Rewards that enable members to earn points, which can be
redeemed in the HBC Rewards catalog for various items, including travel, leisure and entertainment
items, Air Miles reward miles, or Bay and Zellers gift certificates. To use the system, customers have
to provide their HBC card number. This reward program enables Hudson’s Bay to engage in _____
interactions with its customers.
a.
point-of sale and Web-based
b.
customer-centric and technology-centric
c.
retail-centric and Web-based
d.
transaction-based and retail-centric
e.
point-of-sale and retail-centric
31. Communications between customers and organizations that occur in stores or at information kiosks are
called:
a.
live interactions
b.
point-of-sale interactions
c.
empowerment points
d.
survey interactions
e.
product interactions
32. _____ interactions occur when customers buy products in a store.
a.
Point-of-sale
b.
Relationship-based
c.
Cost-based
d.
Retail-centric
e.
Distribution-focused
33. The traditional approach for acquiring data from customers is through:
a.
encoding devices
b.
media
c.
feedback mechanisms
d.
channel interactions
e.
public relations
34. Which of the following is an example of a channel through which customer data are traditionally
gathered?
a.
Store visits
b.
Conversations with salespeople
c.
Interactions via the Web
d.
Phone conversations
e.
All of these
35. In a speech, David Poirier, chief information officer of Hudson’s Bay Company, a Canadian retailer,
said, “We [Hudson’s Bay Company] had all kinds of data in different places. We didn’t have a single
view of the customer until we focused on finding one method to manage relationships with our
customers.” Hudson’s Bay would use a _____ to profile customer segments for better CRM marketing
efforts.
a.
data mart
b.
customer information system
c.
data warehouse
d.
decision support system
e.
data cluster
36. A _____ is a central repository for data from various functional areas of the organization that are
stored and inventoried on a centralized computer system so that information can be shared across all
functional departments of the business.
a.
data mart
b.
customer information system
c.
data warehouse
d.
decision support system
e.
data cluster
37. Continental Airlines has a system that captures information on everything from flight schedules, seat
inventories, and customer profiles that is accessible by 35 departments and 1,300 employees.
Continental’s system is an example of a(n):
a.
information mine
b.
knowledge distribution center
c.
information extraction unit
d.
information storage unit
e.
data warehouse
38. “Lots of organizations have customer data, but not in a way that’s useful,” said a speaker at a recent
retail marketing conference. “Retailers have all kinds of data in different places—they don’t have a
single view of the customer.” The speaker is saying that retailers do NOT use:
a.
information distribution centers
b.
data warehouses
c.
information extraction mines
d.
data intermediaries
e.
marketing information systems
39. Toys “R” Us collects a vast amount of data through its Web site, direct mailings, and retail stores. To
be useful, all of these data would be centralized in a(n):
a.
data mart
b.
decision matrix
c.
data warehouse
d.
decision support system
e.
data cluster
40. A(n) _____ is a collection of data, especially one that can be accessed and manipulated by computer
software.
a.
database
b.
data profile
c.
algorithm
d.
byte
e.
interaction profile
41. The core of the data warehouse is:
a.
empowered employees
b.
transaction channels of communication
c.
point-of-sale interactions
d.
the database
e.
a compiled list
42. Which type of list includes names and addresses of individuals who have responded to an offer of
some kind?
a.
Interactive list
b.
Compiled list
c.
Recent list
d.
Response list
e.
A-list
43. Jan Riddle has limited money to invest in a mailing to people who might be interested in subscribing
to a new magazine about raising children on the autism spectrum. She wants to mail to those prospects
with the highest probability of becoming subscribers. Riddle should use a:
a.
compiled list
b.
data mine
c.
response list
d.
management database
e.
data warehouse activation
44. The Old Westbury College Foundation raised $80,000 at its “A Taste of Long Island,” a gala dinner
where all proceeds went to support scholarship funds and educational programs at SUNY College at
Old Westbury. Attendees were people who had contributed to the scholarship program previously and
were reached through a:
a.
compiled list
b.
data mine
c.
response list
d.
management database
e.
data warehouse activation
45. Dae-Ho recently purchased a Uniden cordless phone system using a $10 rebate offer. He filled out the
rebate certificate and sent it to an address provided by Uniden. The rebate certificate contained
Dae-Ho’s full name, his phone number, his address, and some purchase information. Dae-Ho has most
likely become part of Uniden’s _____ list.
a.
compiled
b.
cookies
c.
response
d.
spam
e.
Internet research
46. A(n) _____ list generally includes names and addresses gleaned from directories or membership
rosters.
a.
predictive
b.
compiled
c.
response
d.
actionable
e.
disintegrated
47. Leah wants to develop a mailing list of people who have participated in bicycle rides for charities. She
has offered to purchase a list of last year’s Alabama-based Ride for Life, which was held to raise funds
for cancer research. Leah is building a(n) _____ list.
a.
actionable
b.
e-mail
c.
response
d.
compiled
e.
predictive
48. _____ is the addition of information to customer or prospect records for the purpose of better
describing or better determining the responsiveness of customers or prospects.
a.
Information formatting
b.
Database enhancement
c.
Data mining
d.
Data shading
e.
Predictive modeling
49. All of the following are obstacles faced by multinational companies building worldwide databases
EXCEPT:
a.
differences in computer systems
b.
language barriers
c.
variations in data-collection methods
d.
legal restrictions on U.S. firms engaged in international data mining
e.
all of the above
50. _____ is the process of finding hidden patterns and relationships in the customer data stored in the data
warehouse.
a.
Data profiling
b.
Cluster analysis
c.
Regression analysis
d.
Customer profiling
e.
Data mining
51. Walmart captures point-of-sale transactions from thousands of stores in several countries and
continuously transmits these data to its massive data warehouse. Wal-Mart allows more than 3,500
suppliers to access data on their products and perform data analyses. These suppliers use the data to
identify customer buying patterns at the store level. They use this information to manage local store
inventory and identify new merchandising opportunities. Both Wal-Mart and its suppliers are engaged
in:
a.
information formatting
b.
database enhancement
c.
data mining
d.
data shading
e.
descriptive modeling
52. Outdoor gear retailer Recreational Equipment, Inc. (REI) in Washington collects a vast amount of data
through its Web site, direct mailings, and retail stores. When REI considers new store locations, it
examines order data to find places with high concentrations of customers buying online and through
the company’s catalogs. REI would be using _____ to identify potential store locations.
a.
information formatting
b.
database enhancement
c.
data mining
d.
data shading
e.
customer prediction
53. Which of the following would allow an online retailer like Frontgate to learn that customers who
purchase electronic products also purchase home office furniture?
a.
Knowledge interpretation
b.
Systems management
c.
Data mining
d.
Information extraction
e.
Information search
54. Ford Canada has turned to the Internet to help it stand apart from its competitors in the automotive
industry. One Internet ad shows a Ford truck driving out of a forest with its engine roaring and mud
splattering on the screen. The wipers come on to reveal the Ford “Built Tough” logo, which then
recedes to the side of the screen. The ad directs people to a site where they can sign up to receive direct
mail from Ford. Ford Canada will combine this database with a database of new F-series truck owners
to look for significant patterns and trends. Ford Canada will use:
a.
an information search system
b.
knowledge trending
c.
data interpolation
d.
data graphing
e.
data mining
55. _____ is the process of breaking large groups of customers into smaller, more homogeneous groups.
a.
Customer segmentation
b.
Recency-frequency-monetary analysis
c.
Data mining