Customer Care Customer Retention and Loyalty 1 — Questions and Answers
Question 1: What does 'customer churn' mean?
- Customers who frequently call the support line
- Customers who stop doing business with a company (Correct answer)
- Customers who refer new clients
- Customers who downgrade their service plan
Correct answer: Customers who stop doing business with a company
Customer churn refers to the rate at which customers end their relationship with a company, a key metric for measuring retention health.
Question 2: Which of the following is a proven strategy for increasing customer loyalty?
- Reducing the number of available support channels
- Consistently exceeding customer expectations through personalized service (Correct answer)
- Offering the lowest prices in the market only
- Automating all customer interactions
Correct answer: Consistently exceeding customer expectations through personalized service
Consistently exceeding expectations — especially through personalization — builds emotional loyalty that price alone cannot create.
Question 3: What is the 'Net Promoter Score' (NPS) designed to measure?
- Agent productivity
- The likelihood that customers will recommend the company to others (Correct answer)
- Average customer wait time
- Number of resolved tickets per month
Correct answer: The likelihood that customers will recommend the company to others
NPS measures customer loyalty by asking how likely they are to recommend the company on a scale of 0–10, categorizing respondents as Promoters, Passives, or Detractors.
Question 4: What is a 'loyalty program' designed to accomplish in customer care?
- Reward high-spending customers to incentivize continued business (Correct answer)
- Replace traditional customer service channels
- Reduce the number of inbound support calls
- Track agent performance metrics
Correct answer: Reward high-spending customers to incentivize continued business
Loyalty programs reward customers for continued engagement, making it more costly for them to switch to a competitor and increasing lifetime value.
Question 5: Which customer type is most valuable to focus retention efforts on?
- New customers who just made their first purchase
- High-value, long-tenure customers who are showing early signs of disengagement (Correct answer)
- Customers who have already churned
- Customers who rarely contact support
Correct answer: High-value, long-tenure customers who are showing early signs of disengagement
Retaining high-value, long-tenure customers who show early warning signs of leaving delivers the greatest return because of their established lifetime value.
Question 6: Research consistently shows that retaining an existing customer costs how much compared to acquiring a new one?
- About the same
- 5 to 7 times less (Correct answer)
- Twice as much
- 3 times more
Correct answer: 5 to 7 times less
Studies consistently show that acquiring a new customer costs 5–7 times more than retaining an existing one, making retention a high-ROI investment.
Customer Care Customer Retention and Loyalty 1
What does 'customer churn' mean?