1. "Analytical CRM" primarily focuses on:
Mining customer data to identify patterns, profitability, and propensity to buy, aiding strategic decisions.
Direct interaction with customers via call centers.
Handling customer complaints.
Managing the sales force automation.
Explanation:
Operational CRM handles front-end interaction. Analytical CRM works in the background to analyze data for segmentation and targeted marketing.
2. Which technology is essential for effective CRM to store and analyze vast amounts of historical customer data?
ATM Switch
Data Warehouse
Router
Firewall
Explanation:
A Data Warehouse integrates data from various sources (loans, deposits, cards) to provide a unified view of the customer, which is the foundation of Analytical CRM.
3. What is "Wallet Share" in CRM?
The discount given to customers.
The share of the bank in the stock market.
The amount of cash in a customer's wallet.
The percentage of a customer's total financial business (deposits/loans) that is with a specific bank.
Explanation:
CRM aims to increase Wallet Share. If a customer has ?100 savings and keeps ?80 with Bank A, Bank A has an 80% wallet share.
4. The first stage in implementing a CRM strategy is usually:
Data Collection and Cleansing.
Training Staff.
Designing Campaigns.
Implementing Software.
Explanation:
Before any analysis or software can work, the bank must ensure it has accurate, consolidated customer data. Garbage In, Garbage Out applies.
5. Which component of CRM is responsible for "Churn Prediction" (predicting which customer is likely to leave the bank)?
Collaborative CRM
Operational CRM
Analytical CRM
Sales Force Automation
Explanation:
Analytical CRM uses data mining and predictive modeling on historical data to identify patterns indicating dissatisfaction or intention to leave (Churn), allowing the bank to take preemptive retention measures.
6. Ethical Cross-Selling requires that:
The bank sells the product with the highest commission.
The product offered is suitable for the customer's profile and needs ("Right to Suitability").
The bank forces the customer to buy insurance with a loan.
The bank bundles products without customer knowledge.
Explanation:
Unethical cross-selling (misselling) erodes trust. Ethical selling focuses on fulfilling a genuine customer need, not just meeting a sales target.
7. Which CRM strategy involves identifying the "Most Valuable Customers" (MVCs) and offering them exclusive benefits to ensure retention?
Win-back Strategy
Customer Selectivity / Tiered Service
Acquisition Strategy
Mass Marketing
Explanation:
Since not all customers are equally profitable, banks use tiered service levels (Gold, Platinum, Priority) to focus resources on retaining high-value customers (Pareto Principle).
8. "Churn Rate" in banking refers to:
The rate at which employees leave.
The speed of cheque clearing.
The percentage of customers who close their accounts or stop doing business with the bank over a period.
The interest rate fluctuation.
Explanation:
Churn (Attrition) is the opposite of retention. High churn indicates dissatisfaction. Banks use predictive analytics to identify "at-risk" customers and retain them.
9. "Customer Lifetime Value" (CLV) is calculating:
The age of the customer.
The net present value of the future profit stream expected from a customer over the entire relationship.
The profit from a single transaction.
The total deposits of the customer.
Explanation:
CLV helps banks decide how much to spend on acquiring and retaining specific customers. High CLV customers warrant higher investment.
10. Offering a "Platinum Credit Card" to a customer who already holds a "Silver Credit Card" is an example of:
Cross-Selling
Up-Selling
Down-Selling
Bundle Pricing
Explanation:
Up-selling involves encouraging the customer to purchase a higher-end product (upgrade) than the one they currently have or are considering. Cross-selling would be selling a different product (like a loan).
11. Which of the following is the correct sequence of stages in CRM implementation?
Data Collection -> Data Analysis -> Customer Segmentation -> Targeted Marketing.
Marketing -> Sales -> Service.
Analyze -> Interact -> Collect Data.
Software Installation -> Hiring Staff -> Profits.
Explanation:
Effective CRM starts with gathering data, cleaning and analyzing it to create segments, and then executing targeted campaigns based on those insights.
12. Which technology is essential for effective CRM to store and analyze vast amounts of historical customer data?
Firewall
Router
Data Warehouse
ATM Switch
Explanation:
A Data Warehouse integrates data from various sources (loans, deposits, cards) to provide a unified view of the customer, which is the foundation of Analytical CRM.
13. What is "Wallet Share" in CRM?
The discount given to customers.
The percentage of a customer's total financial business (deposits/loans) that is with a specific bank.
The share of the bank in the stock market.
The amount of cash in a customer's wallet.
Explanation:
CRM aims to increase Wallet Share. If a customer has ?100 savings and keeps ?80 with Bank A, Bank A has an 80% wallet share.
14. The first stage in implementing a CRM strategy is usually:
Training Staff.
Designing Campaigns.
Implementing Software.
Data Collection and Cleansing.
Explanation:
Before any analysis or software can work, the bank must ensure it has accurate, consolidated customer data. Garbage In, Garbage Out applies.
15. "Sales Force Automation" (SFA) is a core component of:
Operational CRM
Social CRM
Collaborative CRM
Analytical CRM
Explanation:
Operational CRM includes tools for Sales Force Automation (tracking leads, sales pipeline), Service Automation, and Marketing Automation to streamline daily business processes.
16. In the context of CRM, "Market Basket Analysis" is a data mining technique used to:
Analyze stock market trends.
Identify products that are frequently bought together (Cross-selling opportunities).
Predict employee attrition.
Calculate branch profits.
Explanation:
This technique analyzes purchase patterns (e.g., "Customers who bought Home Loans also bought Insurance") to design effective product bundles and cross-sell offers.
17. Which of the following is NOT a benefit of high "Customer Retention"?
Lower cost of servicing existing customers.
Free word-of-mouth publicity.
Higher opportunity for cross-selling.
Increased marketing costs for acquisition.
Explanation:
Retention REDUCES overall marketing costs because acquiring new customers is far more expensive. Retained customers buy more and refer others.
18. The "Next Best Product" (NBP) model in Analytical CRM helps banks to:
Identify fraudulent transactions.
Predict which employee will resign.
Recommend the most relevant product a customer is likely to buy next based on their profile and history.
Calculate the bank's profit.
Explanation:
NBP models use predictive analytics to increase cross-selling success rates by offering the right product at the right time, rather than random selling.
19. A "360-degree view" of the customer in CRM means:
Tracking the customer's physical location.
Taking a photo of the customer from all angles.
Knowing the customer's family details only.
Having a consolidated view of all the customer's interactions, accounts, complaints, and history with the bank across all channels.
Explanation:
This unified view is essential for understanding the customer's total relationship value, identifying cross-sell opportunities, and providing better service.
20. "Collaborative CRM" focuses on:
Sales automation.
Managing vendors.
Analyzing data.
Integrating communication channels (Phone, Email, Web) to share customer information across teams for a consistent service experience.
Explanation:
Collaborative CRM ensures that if a customer complains via email, the call center agent also knows about it, providing a unified interface.