What is the estimated cost of acquiring new customers compared to satisfying and retaining current ones?
Explanation
This question tests a key quantitative rule of thumb in relationship marketing: the relative cost of customer acquisition versus retention. It's a foundational argument for focusing on building loyalty with existing customers.
Other questions
What is the definition of Customer-Perceived Value (CPV) as described in the text?
According to the text, what constitutes the 'total customer cost' in the customer-perceived value calculation?
In the customer value analysis for a tractor purchase, what are the three ways Caterpillar can improve its offer to a buyer?
How is 'loyalty' defined in the chapter?
What is a 'value proposition' according to the text?
The text states that the link between customer satisfaction and customer loyalty is not proportional. At what level of satisfaction, on a 1 to 5 scale, is a customer very likely to repurchase and spread good word of mouth?
A study by Xerox's senior management found that its 'completely satisfied' customers were how many times more likely to repurchase over the next 18 months than its 'very satisfied' customers?
What is the American Society for Quality's definition of 'quality' as used in the chapter?
According to the Net Promoter Score (NPS) methodology described, how are customers who give a rating of 9 or 10 classified?
The text discusses the well-known 80-20 rule in the context of customer profitability. What does this rule state?
How is a 'profitable customer' defined in the chapter?
What is the accounting technique mentioned as being best for conducting customer profitability analysis (CPA)?
What is the definition of Customer Lifetime Value (CLV)?
What is the purpose of the 'marketing funnel' as described in the chapter?
According to the text, a 5 percent reduction in the customer defection rate can increase profits by what range, depending on the industry?
Which of the following is NOT one of the strategies listed for winning companies to improve the value of their customer base?
What are frequency programs (FPs) designed to do?
According to the chapter, what are the three characteristics that identify brand communities?
What is defined as the process of carefully managing detailed information about individual customers and all customer 'touch points' to maximize loyalty?
What is a 'customer touch point'?
According to the chapter, studies show that while customers are dissatisfied about 25 percent of the time, only about what percent actually complain?
What percentage of customers who register a complaint will do business with the organization again if their complaint is resolved quickly, according to the text?
The text explains that the average dissatisfied customer gripes to how many people?
Which of the following is NOT one of the practices listed to help recover customer goodwill after a negative experience?
What is the primary difference between conformance quality and performance quality (or grade)?
In the Customer-Product Profitability Analysis example in Figure 5.3, what makes Customer 3 a 'losing customer'?
What is one of the main challenges for marketers who use Customer Lifetime Value (CLV) concepts, according to the text?
Which company is highlighted as having a pioneering loyalty program that centralized customer data and used predictive analyses to deliver real-time reward offers?
Based on Harrah's research, who were its most profitable customers?
In the simplified CLV formula for an existing customer with constant margins and retention rates, what does 'm' represent?
Using the Margin Multiple table (Table 5.4), what is the margin multiple for a customer with a 90 percent retention rate and a 12 percent discount rate?
What are the two steps a company must take to reduce its customer defection rate?
What does the chapter refer to as a company's 'customer relationship capital'?
What are the three types of retention-building activities that are seen as adding financial benefits, social benefits, or structural ties?
What is the primary difference between open and limited membership clubs as loyalty builders?
What is the practice of marketing to consumers only after gaining their expressed permission called?
What is the average number of people a customer whose complaint was satisfactorily resolved will tell about the good treatment?
According to the text, what are the two main types of retention-building ties that companies can create with customers?
What is the primary role of marketing in helping companies deliver high-quality goods and services?
In the hypothetical CLV example from Table 5.3, what is the Revenue per Customer in Year 5?
In the same CLV example from Table 5.3, what is the Acquisition Cost per Customer?
What is the primary characteristic of a 'straight rebuy' situation for a business buyer?
In the modern customer-oriented organization chart (Figure 5.1b), who is at the top?
A study of a multichannel retailer of books, CDs, and DVDs showed what percentage of long-term incremental revenue came from customers after they joined an online brand community?
What are 'win-back' strategies designed to do?
According to research on retention by Deere and Company, what is their annual retention rate in some product areas?
The marketing funnel is used to calculate 'conversion rates'. What is a conversion rate in this context?
British Airways encountered turbulence and customer experience issues when it became overly focused on what?
What is the primary goal of the 'traditional organization chart' as shown in Figure 5.1(a)?