1. | What was the point of the Tupperware story? -
Befuddled salesmen are the best. -
Customers like to participate in the selling process. -
Tupperware is no longer successful with parties. -
You should run parties to sell products. -
None of the above. | |
2. | Why provide customer service over the Web? -
It saves millions of dollars. -
Customers never get put on hold. -
You can provide data and pictures that are unavailable in any other way. -
You can build loyalty. -
All of the above. | |
3. | Which of the following is not one of the rules for successful customer service? -
Provide good information. -
Empower the CSR agents. -
Set up test and control groups. -
Eliminate toll-free calls so that people must use the Web. -
None of the above; they are all rules for successful customer service. | |
4. | Which of the following is not one of the rules for successful Web customer service? -
The Web site must be as good as or better than a CSR. -
The Web site must be publicized. -
The Web site must be personalized. -
You must have a live agent function. -
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? -
Vendor-managed inventory -
Monthly reports -
IDs and passwords -
Volume-pricing discounts -
30-minute setup time | |
6. | What does “forward deployed” mean in the Boeing parts case? -
The parts are owned by Boeing customers. -
The parts are warehoused in customers’ warehouses. -
The text does not make this clear. -
Boeing does not know where the parts are. -
None of the above. | |
7. | Which of the following is not one of the advantages of letting customers come behind the counter? -
Customers become more loyal. -
Costs are lower. -
Customers like it better. -
Errors are reduced. -
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. | |
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. | |
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. | |
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 | |