RetailAnalytics Inc. recently examined customer retention strategies across premium coffee chains, focusing specifically on Apex Coffee's performance ...
GMAT Information and Ideas : (Ideas) Questions
RetailAnalytics Inc. recently examined customer retention strategies across premium coffee chains, focusing specifically on Apex Coffee's performance data. The baseline analysis revealed annual customer losses of 15-20% despite substantial investments in store ambiance and premium product quality. When researchers tested the effectiveness of combining personalized loyalty rewards with targeted mobile promotions, retention rates improved dramatically to 85% or higher. The dual approach proved successful because loyalty rewards effectively engage frequent customers while mobile promotions successfully attract occasional visitors. Testing either strategy in isolation, however, produced retention results that remained at baseline levels with no measurable improvement. Given these findings, it's most reasonable to conclude that ______
Which choice completes the text with the most logical and precise word or phrase?
mobile promotions alone would likely achieve retention rates higher than 85% if implemented more broadly.
customer retention strategies work best when they target the specific preferences of different customer segments.
coffee chains should abandon traditional retention methods in favor of digital-only approaches.
researchers need to test whether other loyalty strategies are as effective as the ones studied.
Step 1: Decode and Map the Passage
Part A: Passage Analysis Table
| Text from Passage | Analysis |
|---|---|
| 'RetailAnalytics Inc. recently examined customer retention strategies across premium coffee chains, focusing specifically on Apex Coffee's performance data.' |
|
| 'The baseline analysis revealed annual customer losses of 15-20% despite substantial investments in store ambiance and premium product quality.' |
|
| 'When researchers tested the effectiveness of combining personalized loyalty rewards with targeted mobile promotions, retention rates improved dramatically to 85% or higher.' |
|
| 'The dual approach proved successful because loyalty rewards effectively engage frequent customers while mobile promotions successfully attract occasional visitors.' |
|
| 'Testing either strategy in isolation, however, produced retention results that remained at baseline levels with no measurable improvement.' |
|
Part B: Passage Architecture & Core Elements
Main Point: A dual customer retention strategy combining loyalty rewards and mobile promotions succeeded because it targeted different customer segments with appropriate approaches.
Argument Flow: The passage establishes a retention problem at Apex Coffee, presents a successful combined solution that achieved dramatic improvement, explains why it worked by targeting different customer segments, contrasts this with failed individual approaches, and sets up for a logical conclusion about effective retention strategies.
Step 2: Interpret the Question Precisely
This is a fill-in-the-blank question asking us to choose the best logical connector. The answer must create the right relationship between what comes before and after the blank.
Step 3: Prethink the Answer
- The key finding is that the combined strategy worked because it targeted different customer segments - loyalty rewards engaged frequent customers while mobile promotions attracted occasional visitors
- The individual strategies failed when used alone
- The right answer should reflect that effective retention strategies need to target different customer groups with approaches suited to their specific preferences and behaviors
mobile promotions alone would likely achieve retention rates higher than 85% if implemented more broadly.
✗ Incorrect
- Claims mobile promotions alone could achieve 85%+ retention if implemented more broadly
- Directly contradicts the passage's finding that either strategy alone 'produced retention results that remained at baseline levels with no measurable improvement'
customer retention strategies work best when they target the specific preferences of different customer segments.
✓ Correct
- States that retention strategies work best when targeting specific preferences of different customer segments
- Perfectly matches the passage's explanation that success came from loyalty rewards engaging frequent customers while mobile promotions attracted occasional visitors
coffee chains should abandon traditional retention methods in favor of digital-only approaches.
✗ Incorrect
- Suggests abandoning all traditional methods for digital-only approaches
- Too extreme and not supported by the findings, which showed that combining approaches (not going digital-only) was effective
researchers need to test whether other loyalty strategies are as effective as the ones studied.
✗ Incorrect
- Focuses on testing other loyalty strategies rather than drawing a conclusion from the current findings
- Doesn't logically follow from the research presented, which already provides clear evidence about what works