The Customer Loyalty Solution : What Works (and What Doesnt) in Customer Loyalty Programs

1.

What was the breakthrough solution in the Verizon case study?

1. Building a warehouse

2. Segmenting the data

3. Cooperation between IT and Marketing

4. Building a data mart

5. Sending mail first class

2.

Figure the cost per response for an email campaign that costs $0.05 per email and gets a response rate of1.16 percent.

3.

A bank tried two communications programs. One was to mutual funds customers and was aimed at getting them to buy more mutual funds. The second was to those who did not have a home equity loan, asking them to apply for one. Which was likely to get the larger response rate and why?

1. Home equity loan offer. It is easy to qualify for one.

2. Mutual fund offer. It is easier to get people to do more of what they are doing than it is to get them to do something else.

4.

If RFM can double the response rate in direct-mail campaigns, why would it not be equally valuable for email campaigns?

1. RFM does not work with email.

2. There is no control group.

3. Domain names are unavailable.

4. Emails are so inexpensive you can concentrate on maximizing profits.

5. None of the above.

5.

Propose a budget for your company for an online focus group. List the two things that you would most like to get out of the focus group.

6.

Make a chart for a warranty expiration program, comparing the costs of email warranty notification with telemarketing at a cost of $5 per call. Assume that the emails cost $0.06 each. What was the cost per order of each, assuming that the telemarketers got 8 orders out of 100 and the email program got 3 orders out of 100? What was the return on investment? Which method would you choose?

7.

List the four most important things to capture on a customer profile completed through the Web.

8.

What one factor, if it had been left out of the lighting manufacturer’s test, would have ruined the program?

1. The customer rep

2. The lighting expert

3. The test group

4. The control group

5. None of the above

9.

In the case of the restaurant chain with the frequent diner card, what did the program cost the chain over the 13 weeks?

10.

Which is the most important item in an email promotion program?

1. The offer

2. The timing

3. The copy

4. The subject line

5. The domain

1.

(c) Cooperation between IT and Marketing

2.

3.

(b) Mutual fund offer. It is easier to get people to do more of what they are doing than it is to get them to do something else.

4.

(d) Emails are so inexpensive you can concentrate on maximizing profits.

5.

Answers will vary.

6.

7.

Name, email name, permission to use the email name, zip code. You should also try to get at least one other fact, such as customer preference for contact, income, age, or family composition.

8.

(d) The control group

9.

Sales = $150,000; ROI = 8.32; cost = $18,750

10.

(d) The subject line