Chapter 2

1.	Which is not a basic assumption of CRM? A warehouse permits a firm to make the right offer to the right customer at the right time. A data warehouse is essential to marketing success. One-to-one marketing is achievable. Companies can become customer-focused. Increased employee loyalty is essential to increased customer retention.
2.	The formula for the discount rate includes all but which of the following: The waiting time The market rate of interest The marketing costs The risk factor The years to wait
3.	Which of the following is not given in the chapter as a reason why CRM is a failure? CRM software is not available today. The data to predict customers purchasing behavior are lacking. Data warehouses are very expensive. Companies cannot become customer-focused. The Loyalty Effect does not support CRM.
4.	Turn the following paragraph into English: Enterprises struggling with lack of coordination across departments should consider the needs of individual groups and work on a top-down/bottom-up strategy. Because department-level CRM deployments may be more cost-effectively supported by a Tier 2 system integrator with domain-specific skill sets and software relationships, the enterprise should identify a master list of approved smaller service providers to work on individual projects.
5.	What does the National Retail Federation’s CRM Conference survey of North American retail companies estimate the CRM failure rate to be? Nearly 80 percent 70 percent 60 percent 50 percent 40 percent
6.	Which of the following was not listed in the chapter as a recommendation by Frederick Reichheld in The Loyalty Effect? Improve employee loyalty Build a data warehouse Recruit the right sort of customers to begin with Change the commission system Increase the customer retention rate
7.	What does NPV stand for? Not previously viewed Net present value The rate of profits from an enterprise The cumulative profits expected in the future The discount rate
8.	What does it mean to say that database marketing and CRM produce only incremental results? They don’t work. They don’t work very well. The basic product sales are produced by other channels. A 5 percent increase in the retention rate produces a 95 percent increase in profits. None of the above.
9.	Why will most companies never become customer-focused? Because companies are designed for customer acquisition Because Reichheld said it cannot work Because companies want to see that individual products succeed Because the compensation system cannot be changed Because of test and control groups
10.	What does the book suggest as the best way to attract customers to Red Lobster? Database marketing CRM Mass marketing Certificates None of the above

Answers

1.	(e) Increased employee loyalty is essential to increased customer retention.
2.	(c) The marketing costs
3.	(a) CRM software is not available today.
4.	This paragraph cannot be converted into English. It is incomprehensible.
5.	(d) 50 percent
6.	(b) Build a data warehouse
7.	(b) Net present value
8.	(c) The basic product sales are produced by other channels.
9.	(d) Because the compensation system cannot be changed
10.	(c) Mass marketing