Investment Management Certificate (IMC) Practice Exam

The likelihood that people will remain customers is known as the _____ rate.

1. lifetime

2. acquisition

3. retention

4. discount

The correct answer is: retention

The term that best describes the likelihood that people will remain customers is the retention rate. This metric is crucial in evaluating the effectiveness of a company's customer service and engagement strategies. A high retention rate indicates that a business is successfully keeping its customers over time, which is often more cost-effective than acquiring new customers. Retention rates can provide insights into customer satisfaction, loyalty, and the overall health of a business's relationship with its clientele. In contrast, the other terms don't align with the concept of customer loyalty in the same way. The lifetime rate is generally used to discuss the total duration a customer is expected to stay with a company, while the acquisition rate focuses on how effectively a company can attract new customers. The discount rate, on the other hand, is a financial term associated with the present value of future cash flows rather than customer retention. Understanding these definitions and their implications helps in grasping the importance of retaining customers for sustained business growth.