Customer Relationship Management Flashcards

What is 'customer segmentation' in CRM?

Answer: Dividing customers into groups based on shared characteristics to tailor marketing efforts

Customer segmentation groups customers by demographics, buying behavior, or needs so businesses can deliver more targeted and effective marketing messages.

Which of the following best describes 'customer retention'?

Answer: Keeping existing customers engaged and continuing to buy

Customer retention refers to a business's ability to keep its existing customers purchasing over time, which is generally less costly than acquiring new ones.

An entrepreneur sends personalized birthday discount emails to customers. This tactic primarily supports which CRM objective?

Answer: Customer loyalty and engagement

Personalized outreach like birthday discounts makes customers feel valued, directly supporting loyalty and long-term engagement goals.

What is 'churn rate' in a subscription-based small business?

Answer: The percentage of customers who cancel or stop using the service in a given period

Churn rate measures the proportion of customers who discontinue a service within a time period, and a high churn rate signals a retention problem.

Which type of loyalty program rewards customers based on the total amount they spend over time?

Answer: Tiered rewards program

Tiered loyalty programs assign customers to levels (e.g., Silver, Gold, Platinum) based on cumulative spending, incentivizing higher spending to reach better rewards.

What does 'upselling' mean in the context of customer relationship management?

Answer: Encouraging a customer to purchase a higher-end or upgraded version of what they intend to buy

Upselling persuades customers to buy a premium product or upgrade, increasing the transaction value while ideally delivering more value to the customer.

Which of the following is an example of proactive customer service?

Answer: Notifying customers of a product delay before they discover it themselves

Proactive customer service involves anticipating customer needs and communicating potential issues before customers are affected, building trust and reducing frustration.