Chapter 11


1.

What was the point of the Tupperware story?

  1. Befuddled salesmen are the best.

  2. Customers like to participate in the selling process.

  3. Tupperware is no longer successful with parties.

  4. You should run parties to sell products.

  5. None of the above.

( b ) customers like to participate in the selling process.

2.

Why provide customer service over the Web?

  1. It saves millions of dollars.

  2. Customers never get put on hold.

  3. You can provide data and pictures that are unavailable in any other way.

  4. You can build loyalty.

  5. All of the above.

( e ) all of the above.

3.

Which of the following is not one of the rules for successful customer service?

  1. Provide good information.

  2. Empower the CSR agents.

  3. Set up test and control groups.

  4. Eliminate toll-free calls so that people must use the Web.

  5. None of the above; they are all rules for successful customer service.

( d ) eliminate toll-free calls so that people must use the web.

4.

Which of the following is not one of the rules for successful Web customer service?

  1. The Web site must be as good as or better than a CSR.

  2. The Web site must be publicized.

  3. The Web site must be personalized.

  4. You must have a live agent function.

  5. None of the above; they are all rules for successful Web customer service.

( e ) none of the above; they are all rules for successful web customer service.

5.

Which of the following is not a feature of the Dell Premier Pages system?

  1. Vendor-managed inventory

  2. Monthly reports

  3. IDs and passwords

  4. Volume-pricing discounts

  5. 30-minute setup time

( a ) vendor-managed inventory

6.

What does “forward deployed” mean in the Boeing parts case?

  1. The parts are owned by Boeing customers.

  2. The parts are warehoused in customers’ warehouses.

  3. The text does not make this clear.

  4. Boeing does not know where the parts are.

  5. None of the above.

( b ) the parts are warehoused in customers warehouses.

7.

Which of the following is not one of the advantages of letting customers come behind the counter?

  1. Customers become more loyal.

  2. Costs are lower.

  3. Customers like it better.

  4. Errors are reduced.

  5. More CSRs are needed.

( e ) more csrs are needed.

8.

Prepare a 3-year lifetime value table for a business-to-consumer supplier who has a retention rate of 45 percent, 55 percent, 65 percent; a cost ratio of 65 percent, 62 percent, 60 percent; an average sale of $60, $65, $70 per visit; visits per year of2.1,2.5,2.8; an interest rate of 8 percent; a risk factor of1.5; an acquisition cost of $46; and an original number of customers of 200,000.

 year 1 year 2 year 3 customers 200,000 90,000 49,500 retention rate 45% 55% 65% basket size $60 $65 $70 visits per year 2.10 2.50 2.80 revenue $25,200,000 $14,625,000 $9,702,000 cost percent 65% 62% 60% costs $16,380,000 $9,067,500 $5,821,200 acquisition cost ($46) $9,200,000 total costs $25,580,000 $9,067,500 $5,821,200 profit $380,000 $5,557,500 $3,880,800 discount rate 1 1.25 1.4 npv of profit $380,000 $4,446,000 $2,772,000 cumulative npv of profit $380,000 $4,066,000 $6,838,000 lifetime value $1.90 $20.33 $34.19

9.

Prepare a revised table showing a 4 percent increase in the retention rate, an increase in the number of visits per year of 0.4, and a $4 increase in the average spending per visit. Spend $8 per customer per year on marketing to achieve these results.

 year 1 year 2 year 3 customers 200,000 98,000 57,820 retention rate 49% 59% 69% basket size $64 $69 $74 visits per year 2.50 2.90 3.20 revenue $32,000,000 $19,609,800 $13,691,776 cost rate 65% 62% 60% costs $20,800,000 $12,158,076 $8,215,066 acquisition cost ($46) $9,200,000 retention cost ($8) $1,600,000 $ 784,000 $462,560 total costs $31,600,000 $12,942,076 $8,677,626 profit $400,000 $6,667,724 $5,014,150 discount rate 1 1.25 1.4 npv of profit $400,000 $5,334,179 $3,581,536 cumulative npv of profit $400,000 $5,734,179 $9,315,715 lifetime value $2.00 $28.67 $46.58

10.

Using the previous two tables, prepare a table showing the gains or losses from the new marketing program in Question 9, assuming that the company continues to have 200,000 customers.

 year 1 year 2 year 3 old ltv $1.90 $20.33 $34.19 new ltv $2.00 $28.67 $46.58 difference $3.90 $8.34 $12.39 200,000 customers $780,000 $1,668,179 $2,477,715

Answers

1.

(b) Customers like to participate in the selling process.

2.

(e) All of the above.

3.

(d) Eliminate toll-free calls so that people must use the Web.

4.

(e) None of the above; they are all rules for successful Web customer service.

5.

(a) Vendor-managed inventory

6.

(b) The parts are warehoused in customers’ warehouses.

7.

(e) More CSRs are needed.

8.

Year 1

Year 2

Year 3

Customers

200,000

90,000

49,500

Retention rate

45%

55%

65%

Basket size

$60

$65

$70

Visits per year

2.10

2.50

2.80

Revenue

$25,200,000

$14,625,000

$9,702,000

Cost percent

65%

62%

60%

Costs

$16,380,000

$9,067,500

$5,821,200

Acquisition cost ($46)

$ 9,200,000

Total costs

$25,580,000

$9,067,500

$5,821,200

Profit

–$380,000

$5,557,500

$3,880,800

Discount rate

1

1.25

1.4

NPV of profit

–$380,000

$4,446,000

$2,772,000

Cumulative NPV of profit

–$380,000

$4,066,000

$6,838,000

Lifetime value

–$1.90

$20.33

$34.19

9.

Year 1

Year 2

Year 3

Customers

200,000

98,000

57,820

Retention rate

49%

59%

69%

Basket size

$64

$69

$74

Visits per year

2.50

2.90

3.20

Revenue

$32,000,000

$19,609,800

$13,691,776

Cost rate

65%

62%

60%

Costs

$20,800,000

$12,158,076

$8,215,066

Acquisition cost ($46)

$ 9,200,000

Retention cost ($8)

$ 1,600,000

$ 784,000

$ 462,560

Total costs

$31,600,000

$12,942,076

$8,677,626

Profit

$400,000

$6,667,724

$5,014,150

Discount rate

1

1.25

1.4

NPV of profit

$400,000

$5,334,179

$3,581,536

Cumulative NPV of profit

$400,000

$5,734,179

$9,315,715

Lifetime value

$2.00

$28.67

$46.58

10.

Year 1

Year 2

Year 3

Old LTV

–$1.90

$20.33

$34.19

New LTV

$2.00

$28.67

$46.58

Difference

$3.90

$8.34

$12.39

200,000 customers

$780,000

$1,668,179

$2,477,715




The Customer Loyalty Solution. What Works (and What Doesn't in Customer Loyalty Programs)
The Customer Loyalty Solution : What Works (and What Doesnt) in Customer Loyalty Programs
ISBN: 0071363661
EAN: 2147483647
Year: 2002
Pages: 226

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