Marketing Advice Customer Acquisition and Retention 1 — Questions and Answers
Question 1: Which metric measures the total revenue a business can expect from a single customer over the entire relationship?
- Customer Acquisition Cost (CAC)
- Customer Lifetime Value (CLV) (Correct answer)
- Net Promoter Score (NPS)
- Churn Rate
Correct answer: Customer Lifetime Value (CLV)
Customer Lifetime Value (CLV) represents the total revenue a business can expect from a single customer account throughout the business relationship.
Question 2: A company spends $50,000 on marketing in a month and acquires 500 new customers. What is the Customer Acquisition Cost (CAC)?
- $50
- $100 (Correct answer)
- $250
- $500
Correct answer: $100
CAC is calculated by dividing total marketing spend ($50,000) by the number of new customers acquired (500), which equals $100.
Question 3: Which strategy focuses on increasing revenue from existing customers rather than acquiring new ones?
- Lead generation
- Cold outreach
- Customer expansion (Correct answer)
- Awareness advertising
Correct answer: Customer expansion
Customer expansion strategies—such as upselling and cross-selling—target existing customers to increase their spend, boosting revenue without the cost of new acquisition.
Question 4: What does a high customer churn rate indicate for a business?
- Strong brand loyalty
- Customers are leaving faster than they are being retained (Correct answer)
- High customer satisfaction
- Effective onboarding processes
Correct answer: Customers are leaving faster than they are being retained
A high churn rate means a large percentage of customers are discontinuing their relationship with the business, signaling poor retention.
Question 5: Which of the following is the most cost-effective approach to growing a business according to marketing best practices?
- Continuously acquiring new customers
- Retaining existing customers (Correct answer)
- Running paid ads only
- Expanding to new geographic markets
Correct answer: Retaining existing customers
Retaining existing customers is widely considered more cost-effective because acquiring new customers typically costs 5–7x more than keeping current ones.
Question 6: What is the primary goal of a customer onboarding program?
- To upsell premium plans immediately
- To help new customers quickly realize value from a product or service (Correct answer)
- To collect customer payment information
- To automate customer support tickets
Correct answer: To help new customers quickly realize value from a product or service
Effective onboarding accelerates time-to-value, helping new customers understand how to use the product and experience its benefits quickly, which improves retention.
Question 7: Which type of marketing program incentivizes existing customers to refer new customers?
- Affiliate marketing
- Referral marketing (Correct answer)
- Influencer marketing
- Event marketing
Correct answer: Referral marketing
Referral marketing programs reward existing customers for recommending a product or service to friends or colleagues, leveraging word-of-mouth for acquisition.
Marketing Advice Customer Acquisition and Retention 1
Which metric measures the total revenue a business can expect from a single customer over the entire relationship?