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Customer loyalty programs are attempts to bond customers to a company

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Re: Customer loyalty programs are attempts to bond customers to a company  [#permalink]

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New post 29 May 2018, 21:37
swanidhi wrote:
And more questions!!

4. The passage suggests that companies that invoke the "80/20" principle in customer loyalty programs believe which of the following?
A. A well designed customer loyalty program can increase the number of company's loyal customers by as much as 80 percent.
B. About 20 percent of any given company's most profitable customers are likely to be its competitors' most profitable customers as well.
C. It is unreasonable to expect more than 20 percent of customers to be 100 percent loyal to any particular brand of the product.
D. Even "loyal" customers cannot reasonably be expected to stick to one particular brand of product more than 80% of the time.
E. A relatively small number of loyal customers is responsible for about 80% of the company's profits.


5. The second paragraph functions primarily to
A. propose solutions to certain problems inherent in customer loyalty programs.
B. emphasize certain risks inherent in customer loyalty programs.
C. address certain contentions put forth by advocates of customer loyalty programs.
D. defend certain specific aspects of customer loyalty programs against criticism.
E. reconcile competing view points regarding the efficacy of customer loyalty program.


+ 1 Kudos if this helped! :lol:


Can anyone explain how the answer of question number 4 is "E" ? In entire passage we're talking in percentages then howcome "E" is correct answer.
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Re: Customer loyalty programs are attempts to bond customers to a company  [#permalink]

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New post 02 Jun 2018, 10:39
Hey GMATNinja

I am a bit confused with the OA - E for Question #4.

The passage talks about 80% revenue and not 80% profits. Can you explain how E is correct? We don't have any information regarding profits in the entire passage.
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Re: Customer loyalty programs are attempts to bond customers to a company  [#permalink]

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New post 30 Nov 2018, 23:03
GMATNinja,

Can you please provide your explanations for the Question 1.? (Primary passage)

Confused between A. and D.
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Re: Customer loyalty programs are attempts to bond customers to a company  [#permalink]

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New post 03 Dec 2018, 17:19
1
P1 - Customer loyalty programs, how it works, usefulness - not good.
P2 - usefulness, price discount - loyalty.

1. The primary purpose of the passage is to

A. question the notion that customer loyalty programs are beneficial

---------------------------------------------
2. The passage mentions each of the following as a potential reason for customers' divided loyalty EXCEPT

D. Customers will often buy a unfamiliar brand when it is new on the market

-------------------------------------------

3. According to the passage, advocates of the customer loyalty programs claim which of the following about highly loyal customers?

Still, advocates of loyalty programs contend that such programs are beneficial because the costs of serving highly loyal customers are lower,

B. They can be served at lower expense to a company than nonloyal customers

--------------------------------------------
4. The passage suggests that companies that invoke the "80/20" principle in customer loyalty programs believe which of the following?

In support of loyalty programs, companies often invoke the “80/20” principle,which states that about 80 percent of revenue typically comes from only about 20 percent of customers.

E. A relatively small number of loyal customers is responsible for about 80% of the company's profits.

--------------------------------------------
5. The second paragraph functions primarily to


C. address certain contentions put forth by advocates of customer loyalty programs.

------------------------------------------

6. The author of the passage suggests that which of the following is most likely to be true of a customer who is exclusively loyal to a particular brand of product?

usually, they are heavy consumers who simply prefer to buy a number of brands. Such multi-brand loyalty means that one company’s most profitable customers will probably be its competitors’ most profitable customers as well.

C. The customer is probably not a heavy consumer of that particular type of product.
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Re: Customer loyalty programs are attempts to bond customers to a company  [#permalink]

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New post 03 Dec 2018, 17:37
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chibi wrote:
GMATNinja,

Can you please provide your explanations for the Question 1.? (Primary passage)

Confused between A. and D.

chibi - hope this will be helpful.
1. The primary purpose of the passage is to

For a better success in such questions, take care for 2 things. 1 - have a complete paragraph summary in your mind. a mapping will be fine. 2 - find 4 choices that are not answer. In other words eliminate choices that is not covering whole passage. While selecting answer pre-think - why author wrote this whole thing. what he wants to say.

A. question the notion that customer loyalty programs are beneficial --- best answer. covering both paras. start and end of 2nd para shows that author is incline towards "customer loyalty programs are beneficial"

B. examine the reasons why many customers buy multiple brands of products --- no

C. propose some possible alternatives to customer loyalty programs - no

D. demonstrate that most customers are not completely loyal to any one brand of product or service ---- very small part of para, not covering much. also look at author's intent. why wrote this abstract. is it for this ? You see this passage has a lot more to say then just this.

E. compare the benefits of customer loyalty programs with those of other types of purchase incentive programs ---- this was not the purpose, nor this is covering whole thing.
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Thanks!
Do give some kudos.

Simple strategy:
“Once you’ve eliminated the impossible, whatever remains, however improbable, must be the truth.”

Want to improve your Score:
GMAT Ninja YouTube! Series 1| GMAT Ninja YouTube! Series 2 | How to Improve GMAT Quant from Q49 to a Perfect Q51

My Notes:
Reading comprehension | Critical Reasoning | Absolute Phrases | Subjunctive Mood

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Re: Customer loyalty programs are attempts to bond customers to a company &nbs [#permalink] 03 Dec 2018, 17:37

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