& testbook.com Customer Relationship Management (CRM) Questions Question 1: In the context of CRM, what does the abbreviation SFA stand for? Options: 1, Sales Field Allocation 2. Sales Field Audit 3. Sales Frontend Audit 4, Sales Force Automation Correct Answer: Option 4 (Solution Below) Solution: Customer Relationship Management (CRM) is a process of managing a company's interactions and relationships with customers and potential customers. CD key-Points Sales Force Automation: + Sales Force Automation (SFA) is a technique of using software to automate business tasks. + Itis an integrated application of customizable Customer Relationship Management (CRM) tools that automate and streamline inventory, forecasting, leads, forecasting, performance, and analysis + SFA is often used interchangeably with CRM; however, CRM does not necessarily imply automation of sales tasks. + SFA is also known as the sales force management system. + All SFA systems are built with two core components » Content management system: Tracks customers, contacts, forecasting, activities, sales history and analytics. Sales lead tracking system: Tracks leads and opportunity pipeline data + SFA tools include Web-based (hosted CRM) and in-house systems. + Aweb-based, hosted CRM, integrates the application service provider (ASP) model with cloud computing and is famous in small organizations without established CRM infrastructures + In-house SFA provides greater customization but is more costly than hosted CRM SFA packages. + SFA is also known as Sales Automation (SA) software or CRM sofiware. Therefore, in the context of CRM, the abbreviation SFA stands for Sales Force Automation. Ditestbook The Complete Exam Preparation Par Cld)Google iy Question 2: In aCRM system, if the hypothetical retention rate is 1.0, then the survival rate at the end of the 3'¢ year is: Options: 1. 00 2. 0.25 3.10 4.05 Correct Answer: Option 3 (Solution Below) Solution: Ckey-Points Customer retention rate: : Customer retention rate measures the number of customers a company retains over a given period of time. + It's expressed as a percentage of a company’s existing customers who remain loyal within that specific time frame. + For example, ifa company starts with 100 customers and loses 10 of them means that the customer retention rate is 90% or 0.9. + Monitoring the retention metrics is critical for a business to understand lifetime customer value and to quanitfy the efficacy of its customer service program or marketing strategy. + The retention rate can be determined by three simple pieces of information: The number of existing customers at the start of the time period (S) = The number of total customers at the end of the time period (E) + The number of new customers added within the time period (N) + Customer retention rate (CRR) formula: [(E-N)/S] x 100 = CRR Churn rate and Survival rate: + Churn rate is simply the inverse of customer retention rate. + For example, if the customer retention rate is 90% or 0.9 then the chum rate will 10% or 0.1 + Customer churn rate formula: (Churned customer / Original number of customers) x 100. + The survival rate is the percentage of customers that stayed during a given period of time. + The survival rate can be calculated by 100% minus the churn rate. Solution: + As mentioned in the question, the retention rate is 1.0 i.e. 100%; which means the churn rate is 0.0 i.e. 0%.FEE a eet oe ae ne eT Re eee eA EEC SOS aICA re atETer eRePe = SENSE es gene en Cn Sn een ee | RIO Therefore, in a CRM system, if the hypothetical retention rate is 1.0, then the survival rate at the end of the 34 year is 1.0. Ditestbook MMe ecu ell) att) Cues Question 3: What is the name of the data visualization tool that depicts a logical arrangement of key words within a onal contents The size of each word in the depiction usually indicates the frequency or importance of the word. Options: 1. Heat Map 2. Meta Tag 3. Dendrogram 4 Word Cloud Correct Answer: Option 4 (Solution Below) Solution: CD key-Points List - Il + AHeat Map is a graphical representation of data that uses a color-coding system to represent different values. The main purpose of Heat Maps is to better visualize the volume of Heat Map locations/events within a dataset assist in directing viewers towards areas on data visualizations that matter the most. + They are extremely versatilea aie eee attention to the trend + Meta tags are snippets of text that describe a page's content. The meta tags dor't appear on the page itself, but only in the source code of the page + Meta tags are just little Meta Tag content descriptors that help in telling the search engines what a web page is about. + Meta tags only exist in HTML, usually at the head of the page, and thus are only Visible to search engines. A dendrogram is a type of tree diagram representing hierarchical clustering - relationships between a similar set of data. + They are used more often in Dendrogram biology to show clustering between samples or genes, but they can represent any grouped data + Adendrogram can be a column graph, row graph, circular, or can have a fluid shape as well. + Aword cloud (or a tag cloud) is the name of the data visualization tool that depicts, a logical arrangement of keywords within the textual content. + Tags are usually single words, and the size of each Word Cloud word in the depiction usually indicates the frequency or importance of the word. + They can also provide insights when comparing two texts against each other, like product reviews or political speeches, Therefore, Word Cloud is the name of the data visualization tool that depicts a logical arrangement of keywords within textual content. The size of each word in the depiction usually indicates the frequency or importance of the word.bs The Complete Exam Prepai aT Clt C Peete CEU Question 4: mecem database, a set of information stored in a row of the database and pertaining to one customer is Options: 1. Cluster 2, Record 3. Factor 4, Flow Correct Answer: Option 2 (Solution Below) Solution: Customer Relationship Management (CRM) is a process of managing a company's interactions and relationships with customers and potential customers. @Dkey-Points List - Il + The cluster function is widely used in CRM. + It provides business insights that enable firms to offer specific, personalized services and products to their customers. + Clustering is used in a commercial environment for Cross-marketing, cross-selling, deciding media, understanding other goals, ete + Ina CRM database, a set of information stored in a row of the database and pertaining to one customer is called Record. Record) + A customer record holds critical |. data about a customer includingorder data, billing information, and | credit information. | + In CRN, factors are agents or representatives that help in achieving organizational goals. + People, processes, and technology are the three most important Factor factors of CRM. It is essential to ensure that the process is in place and accounts for the people involved in the organization before selecting the right technology. + In CRM, the flow starts from typically capturing new leads, and the sales team will then work on these new leads and try to close the deal. Flow + It can be done by using CRM features like events, tasks, email marketing, reminder and quotes, etc. + Upon close, the CRM flow then moves to projects and operations Therefore, in a CRM database, a set of information stored in a row of the database and pertaining to one customer is called Record. Ditestbook BPM) Ce Clube) Platform ECU Question 5: In case of CRM, what does RF stand for in RFM model? Options: 1. Recency Frequency 2. Right Field3. Radio Frequency 4, Recent Financials Correct Answer: Option 1 (Solution Below) Solution: Customer Relationship Management (CRM) is a process of managing a company’s interactions and relationships with customers and potential customers. EP key-Points RFM Model: + RFMis an abbreviation of Recency, Frequency, Monetary Value. + RFM is @ marketing analysis too! that helps to identify an organizatior's best customers by using a few measures. + The concept of recency, frequency, the monetary value was first published in an article by Jan Roelf Bult and Tom Wansbeek, "Optimal Selection for Direct Mail’. + RFM model supports the marketing adage that "80% of the business come from 20% of the customers’ RFM Metrics ee RECENCY FREQUENCY MONETARY The iBbhpess of “The frequency The intention of customer the customemaciivity, ‘ofthe customer |_| to spend or purchasing be ft purchases or visits transactions oF Visiis power of customer Eg, Trhalginge last 4g. Total number of coder o last @hgaged transactions or average 4, Talal oraverage with the product, time betwee transactions) transactions value ( engaged visits REM model is based on three quantitative factors: 1. Recency: © The more recently a customer has made a purchase with an organization, the more likely is the chance that they will continue to keep the business and brand in mind for subsequent purchases. + Compared to the customers who have not purchased from the business in months or even longer periods, the likelihood of engaging with recent customers is higher. 2, Frequency: © The frequency refers to the fact that how many times a customer makes a purchase of the product. + The frequency of the customer's transaction can be affected based on the factors such as the type of product, the price point of the product, and the need for replacement or replenishment. 3. Monetary Value: + Monetary value refers to the amount of expenditure the customers make with the business during their transactions © Here, a natural inclination is to encourage customers who spend the most money to continue to do so. + With the help of these three factors of the RFM model, firms are able to reasonably predict which customer is more likely to make purchases again, how much revenue could be generated from newcustomers, and how to turn occasional buyers into habitual ones. Therefore, in the case of CRM, RF in the RFM model stands for Recency, Frequency. Pad BM Cw Clie le lola) Eel) eC : oon Question 6: Sequence the steps in CRM process? A. Developing CRM programes B. Collection of customer data C. Analyzing customer data D. Identify the target customers E. Implementing programs Choose the correct answer from the options given below: Options: 1. AB,CED 2. B.C,DAE 3. B,.C,AED 4.C,D,£,AB Correct Answer: Option 2 (Solution Below) Solution: Customer relationship management (CRM) is the process of managing interactions with existing as well as past and potential customers. It is one of many different approaches that allow a company to manage and analyze its own interactions with its past, current, and potential customers. It uses data analysis about customers’ history with a company to improve business relationships with customers, specifically focusing on customer retention and ultimately driving sales growth. i CRM process th tivities and strategies that com, to manage their interaction withae ee ee ee es ee ee ee ee ee ee ee le understand tham more. In turn, you can improve your products and services based on their demands. CD key-Points The steps in the CRM process are: 1. Collection of customer data: CRM systems allow companies to interact effectively with customers, streamline marketing processes, and improve profitability. 2, Analyzing customer data: CRM analytics comprises all programming that analyzes data about customers and presents it to help facilitate and streamline better business decisions. CRM analytics can be considered a form of online analytical processing (OLAP) and may employ data mining. 3. Identify the target customers: After analyzing data about customers next step in the CRM process is to identify the target customers. 4, Developing CRM programs: It refers to all strategies, techniques, tools, and technologies used by enterprises for developing, retaining, and acquiring customers. The software gathers customer data from multiple channels. 5. Implementing programs: Implementation is the process of installing CRM software so an organization can manage current and potential customer relationships. Successful CRM implementation can help businesses analyze customer interactions, efficiently track leads, and streamline processes. Therefore, option 2 is the correct answer. Paes BPO) Ce Clube) ela) Question 7: Which of the following reflects the sum of perceived tangible and intangible benefits and costs to a customer? Options: 1. Customer satisfaction 2. Customer delight 3. Customer value 4. Customer expectation Correct Answer: Option 3 (Solution Below) Solution:Customer value reflects the sum of perceived tangible and intangible benefits and costs to a customer. Oo Key-Points Explanation: Customer Value is the perception of what a product or service is worth to a Customer versus the possible altematives. Worth means whether the Customer feels s/he or he got benefits and services over what s/he paid. Ina simplistic equation form, Customer Value is Benefits-Cost (CV=B-C) ’ Additional Information 1. Customer Satisfaction: + Customer satisfaction (often abbreviated as CSAT) is a term frequently used in marketing. + Itis a measure of how products and services supplied by a company meet of surpass customer expectation. + Customer satisfaction is defined as “the number of customers, or percentage of total customers, whose reported experience with a firm, its products, or its services (ratings) exceeds specified satisfaction goals.” Customer Delight + Customer delight is surprising a customer by exceeding his or her expectations and thus creating a positive emotional reaction. + This emotional reaction leads to word of mouth + Customer delight directly affects the sales and profitability of a company as it helps to distinguish ‘the company and its products and services from the competition. Customer Expectation: + By definition, customer expectations are any set of behaviors or actions that individuals anticipate when interacting with a company. + Historically, customers have expected basics like quality service and fair pricing — but modern customers have much higher expectations, such as proactive service, personalized interactions, and connected experiences across channels. Ditestbook The Complete Exam Preparation cw fee 20008 Video Question 8: The value that is obtained from a customer's positive word of mouth through which one can get additional customer is called:Options: 1, Customer Frequency Value 2, Customer Life Time Value 3. Customer Click Through Value 4, Customer Referral Value Correct Answer: Option 4 (Solution Below) Solution: 0 Key-Points List-1 List-II + Customer Frequency is defined as the number of times a customer has made a purchase from an organization + Itis an integral part of the trilogy called Recency, Customer Frequency, Monetary Value Frequency (REM). Value + The frequency of a customer's transactions may be affected by factors such as the type of product, the price point for the purchase, and the need for replenishment or replacement. + Customer Life Time Value (CLTV) is the present value of future cash flows of a customer contributed towards a business over the entire lifetime of a company. Customer + Itis an important metric used Life Time by marketing managers while Value making decisions regarding sales, marketing, product development, and customer support. + Ideally, lifetime value should be greater than the cost of acquiring a customer. + Customer Click Through Rate refers to the ratio of the number of customers ‘exposed to a link on a specific Bcc ve ‘website paqe or in an emailpeonygitanlinanl Click- Through Value who clicks the link and visits the advertisement of the product or service. + This technique is primarily used by digital marketers to quantify the success and effectiveness of an email or advertising campaign. + The value that is obtained from a customer's positive word of mouth through which ‘one can get an additional customers is called Customer Referral Value (CRV). + CRV requires rigorous, time- intensive methodology, as it must be determined by how many referrals a customer will make when directly prompted, usually through incentive offered by the firm + CRV helps in determining which customers should be targeted for word of mouth and referral campaigns. Customer Referral Value Therefore, the value that is obtained from a customer's positive word of mouth through which one can get additional customer is called Customer Referral Value (CRV). ays BEM) Club) ela) Ela) Question 9: Which of the following techniques is used to know more about current and potential customers? Options: 1. Quality control management 2. Total quality management3. Efficient customer feedback 4, data mining Correct Answer: Option 3 (Solution Below) Solution: oO Key-Points + Quality control Management is a process through which a business ensures that a quality of a product or service is maintained or improved. List-IL Quality control + It requires an environment management in which both management and employees strive for perfection. + It can be done by training personnel, creating benchmarks for product quality, and testing them to check for statistically important variations. + Total Quality Management (TQM) is an approach that organizations use to improve their internal processes and increase customer satisfaction. + When TOM is implemented | properly, it can lead to ‘Total quality decreased costs related to management corrective or preventive maintenance, better overall | performance, and an increased number of loyal customers + TOM places a strong focus on process improvement and controls as a means of continuous improvement. + Customer feedback refers to the insights, information, | and input shared by the community about their experiences regarding a romnanv's nroduct orservices. ee + Efficient customer eustomer feedback is used to know more about current and potential customers. Customer feedback aids in the improvement of the customer experience and can empower positive changes in the business. Data mining is a process used by companies to extract usable data from a larger set of raw data. Businesses can learn more about their customers by using data mining software Data mining to develop more effective marketing strategies, increase sales and decrease costs. Data mining is also known as Knowledge Discovery in Data (KDD). Therefore, efficient customer feedback is used to know more about current and potential customers. Ps BUR Cue) coener ort Cues Question 10: The Dendrogram too! is a tool used in CRM in conjunction with which of these methodologies? Options: 1. Discriminant Analysis 2. Cluster Analysis 3. Regression 4, Pareto AnalysisCorrect Answer: Option 2 (Solution Below) Solution: Cp key-Points Dendrogram tool: + Dendrogram for clustering retail items is a tool used in customer relationship management (CRM) for implementing homogeneous schemes for all the items in one cluster. + In agglomerative hierarchical clustering, dendrograms are developed based on the concept of “distance' between the entities or, groups of entities. + These entities may be the customers, retail items, business units, etc. as per the business problem. a B D | Dendrogram . c EIT] ra ABCODOEF + In the above example, we can see that E and F are most similar, as the height of the link that joins them together is the smallest. + The next two most similar objects are A and B. + The dendrogram tool is aiso used in CRM in conjunction with Cluster Analysis as represented below: Randrnaram