1.3 Explain the Financial Implications of These Metrics: 700-805 Practice Questions (Page 3)

Questions 11–15

1. 11application · medium

   A Cisco partner has a customer with a $500K annual contract. The partner identifies an opportunity to upsell an additional $100K service. The customer is also at risk of churning $50K of the base contract. What is the net effect on the customer's annual recurring revenue if both the upsell and the partial churn occur?

   • ANet increase of $50K
   • BNet decrease of $50K
   • CNet decrease of $100K
   • DNet increase of $100K
   Reveal Solution Discussion Select an answer first
2. 12foundation · easy

   A customer with a $100,000 annual recurring contract churns at the end of year one. Which statement best describes the financial impact of this attrition?

   • AThe company loses $100,000 in that year's revenue, but future years are unaffected.
   • BThe company loses the $100,000 recurring revenue for that year and also forgoes the future recurring revenue the customer would have generated.
   • CThe company can easily replace the lost revenue with new customer acquisition at no extra cost.
   • DThe company only loses the profit margin on the $100,000, not the full revenue amount.
   Reveal Solution Discussion Select an answer first
4. 13foundation · easy

   A company has a Net Revenue Retention (NRR) of 110%. What does this indicate about the existing customer base?

   • AThe company has a 10% profit margin on existing customers.
   • BThe company is growing revenue from existing customers by 10% after accounting for churn and expansion.
   • CThe company has acquired 10% more new customers than it lost.
   • DThe company is losing 10% of its revenue from existing customers.
   Reveal Solution Discussion Select an answer first
5. 14application · medium

   A Cisco partner has a customer with a $2M annual contract. The partner invests $100K in a customer success program that results in a $300K upsell. What is the net financial benefit of this expansion?

   • A$300K net benefit
   • B$200K net benefit
   • C$400K net benefit
   • D$100K net benefit
   Reveal Solution Discussion Select an answer first
6. 15application · medium

   A Cisco partner is evaluating two customer accounts. Account A has a $200K annual contract and is likely to churn. Account B has a $150K annual contract and is likely to renew, but will not expand. The partner has limited resources to invest in retention. Which account should the partner prioritize to minimize financial loss?

   • AAccount B, because it has a lower contract value and is easier to retain.
   • BBoth equally, because any churn is unacceptable.
   • CAccount B, because it is more likely to renew and provides stable revenue.
   • DAccount A, because it has a higher contract value and losing it would have a larger revenue impact.
   Reveal Solution Discussion Select an answer first