Test Bank For Managing Customer Experience and Relationships A Strategic Framework, 4th Edition by D

Test Bank For Managing Customer Experience and Relationships A Strategic Framework, 4th Edition by Don Peppers, Martha Rogers Chapter 1-15 Answers are at the End of Last Chapter

Don Peppers and Martha Rogers

SAMPLE Test Questions Chapter 1: Evolution of Relationships with Customers and Strategic Customer Experiences Multiple choice: For the following questions, choose the best answer.

1. “Customer strategy” is: (pp. 3–5) a. the capability of matching customers and messaging in any medium, whether traditional or digital b. finding customers for the products a company produces c. creating customer value by increasing the value of the customer base d. creating customer campaigns that win market share 2. Customer relationship management (CRM) is best characterized as: (pp. 5–6) a. an enterprise-wide strategy b. a marketing strategy c. a customer service discipline d. a software program e. any of the above 3. For “Industrial Age” companies, competitive advantage is primarily based on: (pp. 3–4) a. product innovation b. brands c. customer information d. a and b 4. For “Interactive Age” companies, competitive advantage is primarily based on: (pp. 4–5) a. product innovation b. brands c. customer information d. a and b

5. Examples of customer-specific behaviors include all of the following except: (pp. 6–9) a. Fans of a product band together on social networking sites and provide service and recommendations to others.

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b. A supervisor orders more computer components by going to a Web page that displays his firm’s contract terms, his own spending to date, and his departmental authorizations. c. A marketing copywriter develops a brochure aimed toward thirtysomething suburban mothers and mails it out to all who fit that specific profile. d. A car-rental customer rents a car without having to complete another reservation profile.

6. Analytical CRM includes the following: (p. 9) a. strategic planning b. cultural change management c. software installations d. measuring change management 7. Traditional marketing’s “four Ps” apply to which part of the “get, keep, and grow” customer strategy? (pp. 10–13) a. get b. keep c. grow d. a and b 8. According to Philip Kotler, the following shifts have occurred as companies move from mass marketing to customer-focused marketing except: (pp. 12–14) a. from market share to share of customer b. from direct contact with end users to reliance on efficient intermediaries c. from large customer segments to individual customers d. from pursuing all types of customers to pursuing high-potential-value customers 9. Which of the following describes a customer-share strategy? (pp. 15–18) a. finding a constant stream of new customers b. using mass media to build brand and announce products c. differentiating products from competitors d. selling as many products as possible to one customer at a time 10. The core benefit of a Learning Relationship for a customer is: (pp. 18–20) a. reduced switching cost b. lower priced products c. higher quality products d. increased product choice 11. The core benefit of Learning Relationship for an enterprise is: (p. 20) a. increased product innovation b. greater profit margins c. greater customer loyalty 2

d. all of the above 12. If an enterprise ranked low in tailoring for customers but high in customer interaction, it would find itself in which quadrant of Peppers and Rogers’ Enterprise Strategy Map? (p. 14) a. Quadrant I: Mass Marketing b. Quadrant II: Niche Marketing c. Quadrant III: Database Marketing d. Quadrant IV: One-to-One Learning Relationships 13. Keeping long-term customers is more beneficial than continually acquiring new customers because: (pp. 29–30) a. Long-term customers tend to pay full price for a product rather than a discounted price. b. Loyal customers tend to give more referrals. c. Acquiring new customers costs more than keeping current ones. d. All of the above Essay questions: 1. Compare and contrast the mass marketing era with the interactive era. What are the goals of each? What defines competitive advantage? What are the key technological tools?

2. Define “customer relationship management.” What is its central purpose?

3. What is a Learning Relationship? What are the benefits of a Learning Relationship—both to the enterprise and to the customer?

4. Describe why customer relationship management, or customer strategy, needs to be an enterprise-wide strategy. How would it affect each of the five principal business functions: a. financial b. production, logistics, and service delivery c. marketing communications, customer service, and interaction d. sales distribution and channel management e. organizational management strategy

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Chapter 2: The Thinking behind Customer Relationships That Leads to Good Experiences Multiple choice: For the following questions, choose the best answer.

1. What are some reasons companies become customer-centric? (pp. 44–45) a. Customers create both short-term and long-term value. b. Customers are the sole source of a company’s revenue. c. Customers are scarce. d. Focusing on customers will ensure every transaction is profitable. e. All of the above 2. The following are reasons some companies have resisted becoming customer-centric except: (pp. 43–44) a. Some believe they should invest in employees rather than customers. b. Some believe that customers are scarce. c. Some believe that they should prioritize cash flow, focusing on products to ensure profitability. d. Some believe they should prioritize “brand promise,” believing that brand awareness is the key to profitability. e. None of the above

3. A business relationship is mutual, interactive, iterative, and _________. (pp. 45–48) a. symmetric b. transactional c. unique d. Loyal

4. According to Jim Barnes, the following quality does not define a genuine business relationship: a. behavior b. attitude c. experience d. environment 5. The 5 Es of customer relationship are: a. exploration, enhancement, experience, emotions, engagement b. environment, expectations, exploration, experience, engagement c. environment, enhancement, experimentation, emotions, engagement d. environment, expectations, emotions, experience, engagement

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6. Barnes suggests a company evaluate a customer’s experience on each of the following levels except: a. easy to do business with b. likelihood to refer to others c. “product in use” experience d. experiences companies can create or enhance 7. In the behavioral definition of customer loyalty, customer loyalty ________ brand preference. (p. 61) a. causes b. results from c. is inversely related to d. none of the above 8. The following are best practices for loyalty programs except: (pp. 67–68) a. Always err on the side of customer privacy over customer insight. b. An effective program allows participants to mix and match aspects according to preferences. c. A loyalty program should be managed around customers, not products. d. Customers value openness, so the best loyalty programs work with other programs.

Essay questions: 1. Does mass marketing have any role in the Interactive Era? If so, what? How might branding be used, and what benefits could it yield for the customer-centric enterprise?

2. What strategy would you suggest for a company dealing with high customer churn (and presumably low customer loyalty), taking into account both attitudinal and behavioral definitions of loyalty? How would you characterize the core problem? How might a loyalty program help?

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Chapter 3: Customer Relationships: Building Blocks of IDIC and Trust Multiple choice: For the following questions, choose the best answer.

1. The primary objective of the IDIC process is: (p. 73) a. building customer value through experiences and relationships b. building a customer’s trust c. an economic transaction between the customer and the company d. The IDIC process is the primary goal of an enterprise, not a means to a goal.

2. Which of the following best expresses the role of emotion in business relationships, as described by the authors? (pp. 73–74) a. A relationship always has an emotional connection, and an emotional connection always indicates a relationship. b. A relationship always has an emotional connection, but an emotional connection does not always indicate a relationship. c. A relationship does not always have an emotional connection, but an emotional connection always indicates a relationship. d. A relationship does not always have an emotional connection, and an emotional connection does not always indicate a relationship.

3. ____________ allows companies to treat different customers differently. (pp. 75–78) a. the trust equation b. the Age of Transparency c. the feedback loop d. self-orientation 4. One primary economic asset of an enterprise is: (p. 75) a. IDIC b. customer information c. social networks d. interactive strategy 5. The fourth implementation task in the IDIC implementation model is: (p. 80) a. customize b. communicate c. create d. connect 6. The “action” or “experience” aspect of the IDIC model includes: (pp. 78–81) a. differentiate and customize b. identify and differentiate c. interact and customize 6

d. identify, differentiate, interact, and customize 7. According to Stephen M. R. Covey, trust includes: (p. 82) a. communication and confidence b. confidence and character c. customization and confidence d. character and competence 8. Which of the following is not a “trust myth” described by Charles Green? (pp. 85–91) a. People like to be listened to. b. More customized contact is better. c. Trust takes time. d. Intimate customer relationships require time and proximity.

9. In Charles Green’s trust equation, the element that outweighs all the others is: (pp. 85– 91) a. credibility b. reliability c. self-orientation d. intimacy 10. Which of the following would be a reliability enhancer? a. providing a highly informative, easy-to-navigate Web site b. never asking a customer to input an ID number if he will be asked for it again later in the call c. using customer information during a service call to speed up the service process, not to accuse the customer of making a mistake d. referring a customer to a competitor’s product if it clearly best meets the customer’s needs e. all of the above 11. Which of the following conditions have not contributed to more companies seeking to become trusted agents for their customers? (p. 95) a. commoditization b. a focus on customer needs, not products c. personalization d. increased transparency made possible by the Internet and other interactive technologies 12. A trusted agent does all of the following except: (pp. 95–97) a. always prioritizes customer’s interest—even if it means referring a competitor’s product—because such a transaction builds trust b. improves the customer’s ability to make choices that best manage his life or business 7

c. is confident that knowledge of customer’s needs and preferences will be monetized at a higher value in the long term than a product-based model d. understands that customer information is a primary economic asset and will use that information to ensure maximum profitability for the company 13. Relationships require customers’ information, but information only comes when they have ___________. a. coupons b. emotional loyalty c. “likes” d. trust

Essay questions: 1. Describe the role that trust has in a Learning Relationship. Why do the authors characterize it as “the currency of all commerce”?

2. List and define the elements of the IDIC implementation process as outlined by the authors. How does this process compare with “analytical CRM” and “operational CRM” as described in Chapter 1?

3. Describe the trust equation and each of its elements, as presented by Charles Green.

What element has the greatest weight and why?

4. Describe a scenario in which your company has lost the trust of a customer because of mishandling of sensitive customer information. As the CEO of the company, how would you address the problem? (Hint: Remember the key elements of an effective apology.)

5. Apply the three basic principles of twenty-first-century trustability to one of the following three kinds of companies: a. financial services b. cellular phone service c. enterprise software

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Chapter 4: Identifying Customers Multiple choice: For the following questions, choose the best answer.

1. The customer-centric company would gather customer information by: (p. 119) a. measuring average demand in groups of customers b. measuring average demand based on customer-specific information c. gathering customer-specific information d. gathering customer-specific information and aggregate information 2. The goal of identifying customers is: (pp. 119–122) a. developing a trusting customer relationship b. recognizing each customer as that customer at every contact c. linking customer data points to provide a full picture of the customer d. a and b e. b and c 3. Which of the following companies would most likely have the easiest time recognizing customers at every interaction? a. telecommunications companies b. retail banks c. consumer packaged goods companies d. car manufacturers 4. An enterprise’s best first step to identifying customers is: a. Make sure all departments have access to the identifying information a company already has, particularly front-line employees. b. Take an inventory of all customer data available in any electronic format. c. Get customers to identify themselves. d. Develop a strong privacy protection policy.

5. What should be the primary goal of frequency marketing programs? (pp. 124–128) a. to accumulate customer information by encouraging purchasers to identify themselves b. to customize offerings to customers c. to provide incentives to customers to gain purchasing loyalty d. to establish a parity strategy 6. Which of the following are not identification tasks? (pp. 129–131) a. analyze b. secure c. link d. collaborate 9

7. For a B2B company, what method would likely not help identify end users? a. linking all customer data across departments, particularly for front-line employees b. allowing customers to choose a specifically tailored instruction manual or training program for the product c. gathering individual information during a maintenance or service call d. providing a convenient reordering method for replenishable supplies the product might consume 8. Which of the following is the role of the “Internet of Things” as identified by Rashi Glazer? (p. 138) a. to help customers connect their private and public worlds b. to help customers with smart products and help companies because the smart products talk to the company c. to overcome the unwillingness of customers to give information d. to connect all of a customer’s products throughout her household or her office 9. Establishing a trusting relationship in which a customer freely shares information with an enterprise will likely involve all of the following approaches except: (pp. 115–116) a. ensuring the customer database is updated at least weekly b. integrating data across departments c. establishing the goal of zero latency d. establishing a strong privacy protection policy 10. According to Rashi Glazer, smart markets are blurring boundaries between: (p. 118) a. management and shareholders b. firm and competitor c. management and employees d. firm and shareholders

Essay questions: 1. Identify three industries that may have difficulty identifying their end-user customers.

What makes identifying customers difficult in this industry? How would each industry approach identifying their end users?

2. Identify four tasks included in the definition of identifying customers. Describe each and provide a real-life application.

3. List and describe the kind of customer data needed to recognize and identify customers.

4. Name three reasons a customer might share information with a company—and three reasons why a customer might choose not to. Create a practical scenario in which a company successfully convinces a customer to share information freely.

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Chapter 5: Differentiating Customers by Value: Some Customers Are Worth More Than Others Multiple choice: For the following questions, choose the best answer.

1. The two fundamental differences between customers are: a. behaviors and attitudes b. value and needs c. behaviors and value d. demographics and attitudes 2. Once we identify customers, a customer-strategy enterprise will differentiate them in order to: a. treat different customers differently b. increase customers’ actual value and decrease potential value c. get an exact measurement of customers’ LTV d. acquire as many new customers as possible 3. The value a customer could create for the enterprise, if the enterprise made the right offerings at the right time, is: a. actual value b. potential value c. short-term value d. long-term value 4. A customer’s value to the enterprise is a function of the profit the customer generates: a. in the past b. in the present c. in the future d. all of the above 5. The net present value of the expected future stream of financial contributions for the customer is: (p. 124) a. customer lifetime value b. actual value c. long-term value d. potential value 6. A customer’s contributions to an enterprise could include the following except: (p. 128) a. product purchases b. service contracts c. using an online service rather than a call center d. word-of-mouth referrals 12

7. The pharmaceutical industry discovered high referral value in: a. key opinion leaders b. public sector employees c. college students d. clients in financial distress 8. From the customer’s perspective, potential value depends upon: a. current product or service offering b. customer behavior c. customer trajectory d. customer need 9. From the enterprise’s perspective, unrealized potential value depends upon all of the following except: a. business with competitor b. additional relevant product lines c. referrals d. current product or service usage 10. According to the Pareto principle: a. 80% of customers produce 20% of the company’s business. b. Customer value is best represented by a bell curve. c. Customer value is best represented by a log-normal distribution curve. d. The differences in customer value are similar to the differences in human height.

11. RFM (recency, frequency, and monetary value) is a useful proxy for: a. actual value b. potential value c. long-term value d. customer lifetime value 12. The goal of value differentiation is: a. historical understanding b. measuring customer lifetime value c. a predictive plan of action d. increasing actual value 13. The customer-strategy enterprise will focus on growing the following customer value categories: a. MVC and BZs b. MVC and MGC c. low-maintenance customers and MVC d. super-growth customers and MGC 13

Essay questions: 1. Define the following ways of measuring customer value: actual value, unrealized potential value, current/short-term value, long-term value, and customer lifetime value.

How do these different measurements relate to each other, where do they overlap, and how do they differ?

2. How do “super-growth customers” present both pitfall and promise to a customerstrategy enterprise? Describe four strategies a company could profitably apply to dealing with these tough customers.

3. Consider the five customer value categories discussed in the chapter. To maintain an ideal mix of customers, what strategy should a company apply to each category?

4. Under what conditions should a customer-strategy enterprise consider firing an unprofitable customer? Describe a scenario in which this is done well.

Chapter 6: Differentiating Customers by Their Needs Multiple choice: For the following questions, choose the best answer.

1. “Customer needs” are best defined as what the customer: a. requires to survive b. directly asks of the company c. indirectly hopes for from the company d. wants or prefers from the company 2. Needs represent the __________ behind a customer’s actions. a. when b. why and how c. what d. what and why 3. Which of the following could be considered a company’s customers? a. purchasing agents b. influencers c. end users d. all of the above 4. “Benefits” differ from “needs” in that: a. Benefits are based on the product. b. Benefits are based on the customer. c. Needs are based on attributes. d. Benefits do not practically differ from needs.

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5. Using Legos as an example, which of the following would be a product benefit? a. recognizable make-believe situations b. colorful, unusual shapes that easily interlock c. toys that incorporate familiar characters d. toys in fantasy configurations 6. Which of the following types of customer profiles would help a company define a customer’s needs? a. demographic b. behavior-based c. need-based d. b and c 7. Which statement best characterizes the relationship between needs, behavior, and customer value? a. Behavior drives needs, and needs drive value. b. Needs and behavior drive value. c. Behavior drives value, and value drives needs. d. Needs drive behavior, and behavior drives value.

8. Which of the following industries would have the most difficulty differentiating customers by needs? a. toy stores b. restaurants c. consulting d. software designers 9. A group of customers with similar attributes is a: a. customer portfolio b. market segment c. demographic profile d. need-based profile 10. Which of the following statements is not true about customer needs? a. Customer needs are dynamic. b. Customer needs have different intensities. c. Customer portfolios are the best way to differentiate by needs. d. Customer needs can be shared.

11. One tool that helps leverage community knowledge is: a. customer portfolios b. market segmentation c. collaborative filtering d. expanded needs set 15

12. Businesses that benefit most from community knowledge: a. have routine interactive communications with customers b. have customers highly differentiated by value c. are B2C d. are B2B 13. To best leverage information about a customer’s needs, the next step after accumulating information about the customer is: a. differentiating the customer by value b. organizing and analyzing the information c. distributing the information to all employees who directly interact with the customer d. creating a customer portfolio Essay questions: 1. Define “customers.” Why is this a difficult task for some industries? Name three industries that might have different groups of customers (i.e., end users vs. retailers) and briefly describe how the needs of each customer group might differ.

2. Name a product that might be used by customers with very different needs (besides Legos). Create a need profile for at least three customer groups. What other products or services could be offered to each of these groups to increase their value?

3. Describe at least six characteristics of customer needs.

4. Imagine that a publishing company wants to establish one-on-one relationships with its most valuable end-user customers (rather than its usual primary customers, the book distributors). Using the pharmaceutical company example as a guide, how might this company establish relationships with its end users? What tools might they use to identify these customers and gather information? What might the primary need groupings be? How might they tailor their customers’ experience to create healthy Learning Relationships? What other products and services could they offer to truly address their customers’ needs and increase customer value?

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Chapter 7: Interacting with Customers: Customer Collaboration Strategy Multiple choice: For the following questions, choose the best answer.

1. The primary goal of marketing in the context of interaction is: a. generating feedback from the customer b. generating personalized, compelling messages about the company c. generating the sale of a product d. generating positive customer referrals 2. Which of the following are not true of a company engaged in genuine dialogue with a customer? a. Parties at both ends have been clearly identified. b. The customer should control the dialogue. c. All parties in the dialogue must be able to participate in it. d. All parties to a dialogue must want to participate in it.

3. A customer does something beneficial for the company, and then is rewarded for that action. This is called: a. an explicit bargain b. an implicit bargain c. an effective way to interact with a customer d. b and c 4. The following are examples of addressable media except: a. the Internet b. television c. Wi-Fi d. voicemail 5. Customer interaction is the responsibility of: a. the sales department b. sales and marketing c. sales, marketing, and customer service d. sales, marketing, customer service, and upper management 6. The three different dimensions of a customer’s experience include: a. physical, emotional, intellectual b. physical, emotional, interactive c. physical, emotional, logical d. physical, emotional, behavioral 7. The customer experience dimension addressed by a Touchmap is: 17

a. b. c. d.

intellectual interactive logical behavioral

8. An effective Current State Touchmap includes all of the following aspects except:) a. recognition of different types of customers b. graphical illustration of the enterprise’s internal structure c. analysis of the customer life cycle d. customer satisfaction surveys 9. An effective Future State Touchmap takes into account all of the “best practices” except: a. treating different customers differently b. unique customer identification at all touchpoints c. collecting as much customer information as possible d. never asking for the same information twice 10. The dialogue information of most interest to a company pertains to a customer’s: a. actual value and potential value b. satisfaction and lifetime value c. needs and potential value d. satisfaction and behavior 11. Creating a “front door” for a company’s Web site is an example of: a. business process reengineering b. differentiating customers by needs c. differentiating customers by value d. touchmapping 12. Which of the following questions is not a Golden Question? a. Do you enjoy entertaining and having large parties at your home? b. Do you eat out at restaurants more than once a week? c. Do you believe it’s important for your family to have one home-cooked meal every day? d. When planning meals, do you prioritize eating healthfully or enjoying the meal?

13. Which of the following actions is not likely to increase customer trust? a. using an opt-out policy b. making an explicit bargain c. ensuring sales and channel partners have the same privacy protection policy d. providing a clear privacy policy for customers to review 14. Complaining customers are valuable to a company because of their: 18

a. b. c. d. e.

high loyalty high potential value data points on products and services willingness to collaborate all of the above

Essay questions: 1. Identify the six criteria for a genuine dialogue. Explain how each supports the definition of a genuine relationship from Chapter 2.

2. What is the difference between an implicit bargain and an explicit bargain? List three types of two-way, addressable media and how an enterprise might use them to create an explicit bargain with individual customers.

3. If you were hired to create a Touchmap for an enterprise seeking to create better customer relationships, what steps would you complete? Explain each step and why it’s important to representing a “customer eye’s view” of the enterprise.

4. Why is a complaining customer valuable to a customer-strategy enterprise? Explain at least three reasons. Why are fewer customers complaining, despite the fact that it’s easier to complain than ever? How might a company encourage complaints?

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Chapter 8: Customer Insight, Dialogue, and Social Media Multiple choice: For the following questions, choose the best answer.

1. In a customer-strategy enterprise, what is the primary reason to use social media? a. to keep up with competition b. to increase possibilities for dialogue and collaboration c. to build customer relationships d. to control brand image e. to take advantage of new sales channels 2. Which of the following is not a likely financial benefit of using social media? a. increased buzz around a brand, product, or service online, potentially increasing sales across channels b. improved search results from customer conversation about an organization, potentially driving more traffic to the company’s Web site c. more influence in offline referrals, leading to more deal closings d. customers helping other customers online, reducing service costs 3. When listening to customer conversations online, the primary things to monitor are: (p.

223) a. brand and customer b. brand and competition c. customer and competition d. super-users and responders 4. Another term for contributing to open source projects is: (p. 226) a. super-user b. crowd service c. self-service d. social media 5. The average percentage of users who participate in an online community is: (p. 231) a. 1% b. 9% c. 10% d. 90% 6. An enterprise seeking to create an online community to encourage crowd service would likely do all of the following except: (p. 229) a. invite super-users to join the community b. provide economic rewards for participating c. advertise the community 20

d. provide a means for users to rate super-users’ answers 7. The 1-9-90 dynamic is most akin to: a. exponential distribution b. a bell curve c. a power law distribution d. a normal distribution 8. When recruiting super-users, the most effective rewards will be: a. monetary b. social c. sample products d. b and c 9. Social media has resulted in all of the following except: a. increased capacity to deceive b. decreased capacity to deceive c. higher ethical expectations d. decreased spin 10. The blogs that draw the most readers tend to have all of the following characteristics except: a. employees that post about their personal lives b. employees that mostly post about products c. content monitored as little as possible d. rules applied to avoid legal issues Essay questions: 1. You’ve been appointed as the new chief marketing officer (CMO) for a large packagedgoods company. Your CEO has decided that your company will be the premier “relationship” company in your industry. a. What could that mean? b. How will you execute that? c. What will you use as data collection tools? d. What role will interactivity play in your plans? e. What role will e-mail play? Mobile devices? Social networking platforms? Be as specific as you can.

2. Answer all the questions in question 1 as the new CMO for a large automotive company.

3. Answer all the questions in question 1 as the new CMO for a retail shoe chain.

4. Answer all the questions in question 1 as the new CMO (equivalent) for the U.S. Navy.

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Chapter 9: Privacy and Customer Feedback Multiple choice: For the following questions, choose the best answer.

1. According to the authors, what common interest do enterprises and customers now share in the context of privacy? a. creating a mutually profitable relationship b. loosening Europe’s privacy laws c. loosening U.S. privacy laws d. protecting customer information 2. A customer-based enterprise must learn to balance both privacy and: (p. 291) a. personalization b. interaction c. customer needs d. customer value 3. What three events have most significantly shaped current Western attitudes toward privacy? (p. 292) a. the 9/11 terrorist attacks, the rise of mobile technology, and hack attacks b. the rise of social media, hack attacks, and the 9/11 terrorist attacks c. the 9/11 terrorist attacks, the 2008 financial collapse, and the rise of social media d. the rise of mobile technology, hack attacks, and the rise of social media 4. One way to summarize the seemingly contradictory data about consumer privacy attitudes is: a. Consumers prefer personalized, relevant marketing messages, even with questionable security. b. Consumers prefer to remain inconspicuous, even if it means being unable to identify someone when they need to. c. Consumers want both maximum convenience and maximum privacy. d. Consumers prefer to share as little information with companies as possible, even if it means less relevance.

5. The most valuable commodity a. attention b. information c. money d. innovation 6. Seth Godin’s idea of “permission marketing” is an old concept with new relevance because: 22

a. Dating is now more common than arranged marriages. b. Permission marketing is more time efficient than interruption marketing. c. Permission marketing takes advantage of new technology better than interruption marketing. d. Permission marketing costs less money than interruption marketing.

7. For those building the value of the customer base in a company, privacy could mean any of the following except: a. avoiding litigation b. getting information from customers who are comfortable giving it c. protecting customer data as a competitive asset d. none of the above 8. The two categories of business concerns about privacy are: a. reduction of cost and reduction of risk b. individual privacy and data security c. choice and data security d. reduction of cost and improving trust 9. The document governing privacy protection in Europe is: (p. 257) a. United Nations Declaration of Human Rights b. European Convention on Human Rights c. Safe Harbor agreement d. European Union Data Protection Directive 10. Which statement is true about opt-in and opt-out policies? (pp. 311–312) a. Consumer groups favor opt-in, while industry groups favor opt-out. b. Consumer groups favor opt-out, while industry groups favor opt-in. c. Consumer groups and industry groups favor opt-in. d. Consumer groups and industry groups favor opt-out.

11. All of the following are points to consider in creating a privacy pledge except: a. Specify how personal information will be used by the company. b. Specify how personal information will not be used by the company. c. State how a customer can order the company to stop collecting information and/or purge her information file. d. none of the above 12. An organization that endorses each customer’s control of his own information and identifies groups and companies that meet its privacy protection requirements is: a. the European Union Data Protection Directive b. the United Nations Declaration on Human Rights c. TRUSTe d. Safe Harbor 23

Essay questions: 1. Characterize current Western consumer attitudes toward privacy. What key elements have impacted these attitudes? What beliefs are held in tension, and what are the biggest concerns? How are enterprises’ privacy concerns the same—and different?

2. Define “permission marketing” and explain how it is different from interruption marketing. Why is permission marketing so important now?

3. Define, compare, and contrast privacy regulations in the United States and Europe. How do (or might) these regulations affect intercontinental business?

4. List and describe the 10 key considerations in developing a customer privacy pledge.

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Chapter 10: The Payoff of IDIC: Using Mass Customization to Build Learning Relationships Multiple choice: For the following questions, choose the best answer.

1. On average, an American shopper has to choose among _______ times as many products as he actually buys. (p. 321) a. 10 b. 100 c. 1,000 d. 10,000 2. The mass production of goods and services in lot sizes of one is known as: (p. 322) a. mass customization b. mass configuration c. mass production d. a and b 3. What technique helps customization reduce a company’s all-in costs? (p. 323–324) a. modularization b. speculative manufacturing c. make-to-forecast model d. personalization 4. The demand chain includes all of the following except: (p. 325) a. sales b. production c. marketing d. customer service 5. Failing to align supply-chain management with demand-chain management results in: (pp. 325–326) a. underdelivering b. overdelivering c. lost share-of-customer opportunities d. all of the above 6. Creating a customized product for a customer through dialogue with that customer is known as: (p. 327) a. adaptive customization b. cosmetic customization c. collaborative customization d. transparent customization 25

7. The two kinds of customization that provide the greatest competitive advantage are: (p.

327) a. adaptive and cosmetic b. collaborative and transparent c. adaptive and collaborative d. cosmetic and transparent 8. Which of the following characterizes mass customization (vs. mass production)? a. economies of scale b. make to forecast c. speculative shipping costs d. demand chain management 9. The difference between what customers want and what they’re willing to settle for is: a. customer satisfaction b. customer sacrifice c. customer experience d. customer dissatisfaction 10. What primarily drives the success of mass customization? a. customer collaboration b. offering “bundled” options c. extensive inventory d. unique personalization 11. Which of the following aspects would be part of a customer’s enhanced need set? a. timing or frequency b. promotion and marketing communication c. related products or services d. help lines and product support 12. Which customization activities would most likely increase a customer’s long-term value? a. expanding the need set b. improving the quality of the product c. improving service quality d. all of the above 13. Which of the following companies would benefit least from creating value streams? a. furniture retailer b. bookseller c. home builder d. clothing retailer Essay questions: 26

1. Describe the difference between mass production and mass customization.

2. Discuss the four levels of customization, according to Pine and Gilmore. Which types provide the most opportunity for customers to get exactly what they want—and why does this not provide a competitive advantage?

3. How might a company that offers products difficult to customize still mass customize for their customers? What other aspects might it customize to provide a high-value product? Create a scenario in which a computer software company might create such an offering for a customer.

4. Name and fully describe the three levels of customer needs a “product-as-service” potentially meets, as described by the authors.

5. Explain how business rules can drive personalization.

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Chapter 11: Optimizing around the Customer: Measuring the Success of Customer-Based Initiatives and the Customer-Centric Organization Multiple choice: For the following questions, choose the best answer.

1. Customers create long-term value because they have __________ . (p. 358) a. money b. memories c. needs d. values 2. The actual economic value of any business enterprise can measured in terms of: (p. 358) a. the discounted net present value of the future stream of cash flow b. the future value of the net present cash flow c. the discounted net present value of average past earnings d. the future value of past net cash flow 3. Creating maximum customer value requires: a. prioritizing long-term value over short-term value b. prioritizing short-term value over long-term value c. balancing short-term value with long-term value d. focusing on long-term value to the exclusion of short-term value 4. Traditional measures of financial success emphasize: a. prioritizing long-term value over short-term value b. prioritizing short-term value over long-term value c. balancing short-term value with long-term value d. focusing on long-term value to the exclusion of short-term value 5. Legacy metrics include all of the following except: (p. 361) a. quarterly product sales b. number of new customers acquired c. Return on Customer d. return on investment 6. Illustrating the importance of the customer as financial asset, Amazon’s Jeff Bezos has said that he prioritizes spending on all of the following except: a. advertising b. free shipping c. lower prices d. service enhancement

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7. Which of the following reasons help explain why companies tend to focus on short-term performance? a. the investment community’s obsession with short-term performance b. companies feel powerless to change c. customers’ obsession with short-term performance d. a and b e. a and c 8. Customer equity includes the LTV of: a. past and present customers b. present and future customers c. present customers only d. past, present, and future customers 9. Gupta and Lehmann’s customer equity study showed that customer equity was measurably impacted most by: a. reducing the cost of new customer acquisition b. increasing customer retention rates c. raising product margins d. increasing stock prices 10. Losing a customer’s business due to circumstances beyond a company’s control is referred to as: a. customer attrition b. customer defection c. customer retention d. “firing” an unprofitable customer 11. All of the following are factors in defining customer equity except: a. acquiring more customers b. acquiring more valuable customers c. reducing customer attrition d. increasing service costs per customer 12. The metric that measures how well an enterprise is using customers to create shortterm and long-term value is: a. return on investment b. Return on Customer c. return on equity d. total shareholder return 13. Value harvesters are companies whose: a. customer value rate is below their cost of capital b. customer value rate is above their cost of capital 29

c. customer value rate is equal to their cost of capital d. customer value rate is below zero 14. Predictive modeling includes all of the following steps except: a. devising an equation for LTV that includes data on measurable behaviors b. identifying the most predictive variables currently available c. generating a second equation to predict an individual customer’s LTV d. using transactional data to calculate LTV retrospectively 15. All of the following represent lifestyle changes relevant to predicting LTV change except: a. A customer signs up for an e-mail newsletter. b. A privately held business goes public. c. A customer earns an advanced degree. d. A customer’s health status changes.

Essay questions: 1. Define “customer equity” and explain why this concept is crucial to a company’s profitability. What does it include? How is it measured? What are the obstacles to measuring it accurately?

2. Explain fully why ROC = TSR. 3. Explain the difference between value creators, value harvesters, and value destroyers.

What values and behaviors characterize companies in each category?

4. How would a company calculate its ROC? (Include relevant equations as well as a description of the process.) How might the results be used in daily decision making?

5. List the four leading indicators for predicting LTV change and provide examples of each.

Include both B2B and B2C examples.

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Chapter 12: Using Customer Analytics to Build the Success of the Customer-Strategy Enterprise Multiple choice: For the following questions, choose the best answer.

1. In the interactive age, ___________ drives the central engine of competition. (p. 413) a. customer analytics b. customer information c. product optimization d. mass customization 2. According to the authors, the metaphor of “data mining” captures all of the following except: a. creating predictive and descriptive models to support decision making b. exploring and analyzing large quantities of data to discover meaningful patterns c. discovering real-time insights into the nature of individual customers d. extracting and presenting new knowledge selected from databases for actionable decisions 3. Customer analytics provides what missing link for understanding customers? (p. 417) a. classification b. analysis c. interaction d. prediction 4. According to the case study presented in Chapter 12, Verizon Wireless discovered which of the following benefits from customer analytics? a. short-term revenue increase b. reduced marketing costs c. reduced customer service costs d. easier and faster transactions 5. “Dirty” data can mean all of the following except: a. private b. expired c. irrelevant d. nonsequential 6. Preparing customer data for analysis (the analysis process) includes which of the following steps? a. classification, estimation, regression, prediction, clustering b. identification, differentiation, interaction, customization 31

c.

collecting, defining, analyzing, comparing

d.

ranking, modeling, simulating, learning

7.

What characteristic dictates most whether a company would benefit from customer analytics? a. whether the company has a Web site b. whether the company generates large amounts of customer-specific information c. whether a company is customer-centric d. the number of employees a company has

8.

The second stage in the evolution of CRM software is: a. b. c. d.

SaaS CRM CRM in the cloud open-source CRM enterprise CRM

9.

The authors predict the next stage of customer analytics will involve: a. to a business process b. c. with each customer d. characteristics to data analysis

10.

evolving from a technology cloud-based computing deepening the relationship applying financial

The purpose of customer analytics is: a. relationship with the customer b. customer data c. d.

develop a deeper assign a dollar value to reduce marketing expenses increase customer service

Essay questions: 32

1. Fully define both “data mining” and “customer analytics.” How are they the same—and how are they different?

2. List and discuss five sales and marketing benefits of customer analytics. For each, explain how customer analytics enables these benefits.

3. Explain how customer analytics is a business process and not just a technology.

4. According to Jim Goodnight, why is it important that an enterprise have a holistic view of the customer? How does customer analytics enable this view?

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Chapter 13: Organizing and Managing the Profitable Customer-Strategy Enterprise, Part 1 Multiple choice: For the following questions, choose the best answer.

1. All of the following are key questions for a company transitioning to a customer-strategy enterprise except: (p. 448) a. Who will be responsible for keeping and growing each customer? b. Who will be responsible for building short-term and long-term customer value? c. What authority will the chief executive have to change how the enterprise treats customers individually? d. By what criteria will success be measured, reported, and used for compensation?

2. “Customer service” has traditionally been considered to be a company’s efforts to answer inquiries and handle complaints. But Price and Jaffe offer ideas about how to fix service more systemically, by preventing the need for “service.” These include all of the following except: a. Measure the efficiency of the call center by counting the number of calls that are handled per hour. b. Create engaging self-service. c. Make it easy to contact the company. d. Make customer service part of the responsibility of billing, IT, credit, finance, and manufacturing.

3. All of the following are ways a customer-strategy enterprise might meet the goal of maximizing the customer base except: a. retaining profitable customers and growing them b. acquiring as many new customers as possible c. eliminating unprofitable customers d. customizing products, prices, services, and/or communications for each customer 4. Which of the following statements is true about using satisfaction as a proxy for measuring loyalty? a. Loyal customers are likely to be satisfied, and satisfied customers are likely to be loyal. b. Loyal customers are likely to be satisfied, but not all satisfied customers will be loyal. c. Not all loyal customers are satisfied, but satisfied customers are likely to be loyal. d. Not all loyal customers will be satisfied, and not all satisfied customers will be loyal.

5. A customer-strategy organization’s first investment should be in: a. establishing a customer-centric vision 34

b. employee training and hiring c. information technology d. organizational reordering 6. “Relationship governance” refers to which of the following (p. 471) : a. understanding how to manage relationships with channel partners b. smart omnichannel marketing that ties together the brand message across all traditional and digital media c. determining who will be in charge at the enterprise of building the value of each customer d. measuring how much profit a customer makes for a company in the current quarter 7. What is the biggest obstacle for most companies making the transition to becoming a customer-strategy enterprise? a. transforming employee culture b. establishing new and consistent criteria and metrics for success in a customercentric environment c. appointing capabilities managers d. functional roles and their leadership 8. Customer relationship managers will be directly responsible for: a. customer portfolios b. brand campaigns c. capabilities managers d. product managers 9. In customer-strategy companies, capabilities managers are most akin to: a. product VPs b. product managers c. customer managers d. chief operating officers 10. The purpose of “customer journey mapping” is to a. document a customer’s existing journey from awareness through use b. determine the geographic route taken by a customer to and from a store c. visualize the touchpoints and interaction points with a customer d. determine the route followed online by a customer through various websites e. a and c f. a and d Essay questions:

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1. More and more in the past 20 years, companies have asked “What is it like to be our customer?” and “What should it be like?” Closing the gap between these two is how we think of customer experience management. How does this differ from “user experience management”? According to Allen Pennington, what are the tools available to the customer experience manager to increase customer value, and what should an executive do to start a customer experience push?

2. List and describe the stages in leadership for a customer-strategy organization, as presented by Marijo Puleo.

3. Choose an organization and draw its organizational chart. How would that chart have to change in order to facilitate customer management and to make sure people are evaluated, measured, and compensated for building the value of the customer base?

Consider these questions: a. If a customer’s value is measured across more than one division, is one person placed in charge of that customer relationship? b. Should the enterprise establish a key account-selling system? c. Should the enterprise underwrite a more comprehensive information system, standardizing customer data across each division? d. Should the sales force be better automated? Who should set the strategy for how a sales rep interacts with a particular customer? e. Is it possible for the various Web sites and call centers operated by the company to work together better? f. Should the company package more services with the products it sells, and if so, how should those services be delivered?

4. For the same organization, consider the current culture. Can you describe it? Would that have to change for the organization to manage the relationship with and value of one customer at a time? If so, how?

5. At the same organization, assume the company rank-orders customers by value and places the most valuable customers behind a picket fence for one-to-one treatment.

What happens to customers and to portfolio managers behind that picket fence?

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Chapter 14: Organizing and Managing the Profitable Customer-Strategy Enterprise, Part 2 Multiple choice: For the following questions, choose the best answer.

1. The highest level of development of an organization is a. internal cohesion b. external cohesion c. transformation d. self-esteem 2. Pilot projects are an ideal way to launch a customer initiative for: (p. 519) a. small-to-medium businesses b. large businesses c. businesses who already identify customers individually and differentiate them by value d. businesses who do not yet identify or differentiate their customers individually e. a, b, and c f. a, b, and d 3. The picket fence strategy is best suited for: (p. 412) a. small-to-medium businesses b. large businesses c. businesses who already identify customers individually and differentiate them by value d. businesses who do not yet identify or differentiate their customers individually e. a, b, and c f. a, b, and d 4. Segment management is best suited for: (p. 414) a. small-to-medium businesses b. large businesses c. businesses who already identify customers individually and differentiate them by value d. businesses who do not yet identify or differentiate their customers individually e. a, b, and c f. a, b, and d 5. The core structure of the customer management organization is: (p. 414) a. Return on Customer b. customer portfolio management c. the sales department d. customer relationships 37

6. One of the challenges in a sales department’s transition to customer strategy is: (pp.

415-416) a. more sales reps have fewer responsibilities b. it becomes more difficult to share information across the firm c. commissions often decrease d. sales reps’ work becomes more visible 7. All of the following agreements would likely ease the sales department’s transition except: (p. 416) a. addressing ways salespeople can save time and earn higher commissions b. phasing out the use of sales force automation software c. specifying which information is for enterprise use and which is for their use only d. prioritizing which information is needed about customers 8. One new function of the transitioning customer-strategy marketing department is: a. customer analytics b. redefining the organization c. communicating with the customer d. articulating customer demographics 9. For the customer service department, when considering self-service options for customers, what is the best approach? (pp. 430–431) a. prioritizing direct CSR contact with the customer whenever possible b. prioritizing self-service for the customer whenever possible c. balancing CSR contact and self-service d. having all options available to all customers, and always allowing the customer to choose 10. Which is the most relevant customer strategy for research and development? (p. 435) a. measuring and tracking Return on Customer b. accessing real-time customer information c. improving employee culture d. establishing test cells and control groups 11. In the transition to a customer-strategy enterprise, the human resources department plays all of the following roles except: (pp. 436–437) a. evaluating whether the company has the capability to change b. addressing all key recruiting, training, and ongoing support issues c. creating new career path opportunities d. aligning technology implementation with business strategy 12. The greatest competitive advantage in managing employees in a customer-strategy organization lies in: (p. 444) a. using technology to automate more routine jobs 38

b. equalizing salaries to value lower-tier employees c. making the most talented employees more productive d. setting clear rules about personal use of company resources Essay questions: 1. For each of the following four departments, explain what transitioning to a customer-strategy organization entails. Describe both the desired end result and the process it will take a traditionally organized department to get there. For example: What new functions and values are required? What are the particular challenges?

What solutions can help ease these challenges? a. b. c. d.

sales department marketing department human resources department upper management

2. When Peppers and Rogers talk about “using up customers,” what does that mean?

And how do customer-focused companies use that idea to determine (a) customer value and (b) how to manage customer portfolios?

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Chapter 15: Futureproofing the Customer-Centric Organization Multiple choice: For the following questions, choose the best answer.

1. Which of the following are essential for leading the customer-focused organization and being a customer manager? a. innovation and determination b. determination and efficiency c. efficiency and trustability d. trustability and innovation 2. Extensive surveys indicate that people’s single most trusted source is: (p. 461) a. family b. friends c. unknown peers d. subject matter experts 3. All of the following behaviors should characterize customer relationship managers except: (pp. 464–465) a. creating new sets of reward structures b. keeping departmental boundaries intact while generating enterprise-wide results c. sponsoring and sheltering pilot projects d. having direct contact with customers 4. Which of the following is true? a. An interconnected world both requires and produces trust. b. An interconnected world produces trust but does not require it. c. An interconnected world requires trust but does not produce it. d. An interconnected world neither requires nor produces trust.

5. Which of the following have increased the importance of trust in today’s marketplace? a. speed of technology b. open-source products c. rate-the-rater mechanisms d. privacy policies 6. The performance of the truly outstanding companies is characterized by: (p. 471) a. a series of short-term competitive advantages b. incremental competitive advantage c. sustainable competitive advantage 7. Companies that maintain their innovative edge find a balance between: (pp. 476–477) 40

a. b. c. d.

culture and customer equity efficiency and cost reduction exploration and exploitation innovation and experimentation

Essay questions: 1. Write up a job description for a customer relationship manager. Include goals and values as well as roles and tasks.

2. Do you think innovation is directly linked to the size or age of the company? In other words, can large companies be truly innovative? Why? What attributes characterize innovative companies—and how can a company maintain its innovative edge?

3. Clarify how being “trustworthy” is eclipsed by being “trustable.” Why is the difference important to a company?

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Managing Customer Experience and Relationships: A Strategic Framework 4th Edition Don Peppers and Martha Rogers

Multiple Choice Test Questions Answer Key Chapter 1: Evolution of Relationships with Customers and Strategic Customer Experiences 1. c 2. e 3. d 4. c 5. c 6. a 7. a (or d) 8. b 9. d 10. c 11. d 12. c 13. d Chapter 2: The Thinking behind Customer Relationships That Leads to Good Experiences 1. e 2. b 3. c

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4. a 5. d 6. b 7. b 8. a Chapter 3: Customer Relationships: Building Blocks of IDIC and Trust 1. a 2. d 3. c 4. b 5. a 6. c 7. d 8. a 9. c 10. e 11. a 12. d 13. d Chapter 4: Identifying Customers 1. d 2. e 3. a 4. b 43

5. a 6. d 7. a 8. b 9. a 10. c Chapter 5: Differentiating Customers by Value: Some Customers Are Worth More Than Others 1. b 2. a 3. b 4. c 5. a 6. c 7. a 8. d 9. d 10. c 11. d 12. c 13. d Chapter 6: Differentiating Customers by Their Needs 1. d 2. b

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3. d 4. a 5. a 6. c 7. d 8. d 9. b 10. c 11. c 12. a 13. b Chapter 7: Interacting with Customers: Customer Collaboration Strategy 1. a 2. b 3. b 4. b 5. d 6. c 7. b 8. b 9. c 10. c 11. b 12. b 45

13. a 14. d or e Chapter 8: Customer Insight, Dialogue, and Social Media 1. b 2. c 3. a 4. b 5. c 6. b 7. c 8. d 9. a 10. b Chapter 9: Privacy and Customer Feedback 1. d 2. a 3. b 4. c 5. a 6. c 7. a 8. b 9. d 10. a 46

11. d 12. c Chapter 10: The Payoff of IDIC: Using Mass Customization to Build Learning Relationships 1. b 2. d 3. a 4. b 5. d 6. c 7. b 8. d 9. b 10. a 11. c 12. a 13. b Chapter 11: Optimizing around the Customer: Measuring the Success of Customer-Based Initiatives and the Customer-Centric Organization 1. b 2. a 3. c 4. b 5. c 6. a

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7. d 8. b 9. b 10. a 11. d 12. b 13. c 14. d 15. a Chapter 12: Using Customer Analytics to Build the Success of the Customer-Strategy Enterprise 1. b 2. c 3. d 4. b 5. a 6. a 7. b 8. a 9. d 10. a Chapter 13: Organizing and Managing the Profitable Customer-Strategy Enterprise, Part 1 1. c 2. a

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3. b 4. b 5. a 6. c 7. b 8. a 9. b 10. e Chapter 14: Organizing and Managing the Profitable Customer-Strategy Enterprise, Part 2 1. a 2. e 3. f 4. d 5. b 6. d 7. b 8. a 9. c 10. b 11. d 12. c Chapter 15: Futureproofing the Customer-Centric Organization 1. d 2. c 49

3. b 4. a 5. a 6. c 7. c

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