1.4 Explain the Importance of Recurring Revenue 700-805 Practice Questions (Page 3)

Questions 11–15

1. 11foundation · easy

   How does a recurring revenue model foster long-term customer relationships?

   • AIt eliminates the need for customer support after the initial sale
   • BIt requires customers to make a large upfront payment, increasing their commitment
   • CIt creates ongoing interactions and touchpoints between Cisco and the customer
   • DIt locks customers into contracts that they cannot cancel
   Reveal Solution Discussion Select an answer first
2. 12foundation · easy

   Why does recurring revenue support sustainable growth for Cisco?

   • AIt eliminates the need for Cisco to acquire new customers
   • BIt provides a stable base that allows Cisco to plan and invest in expansion
   • CIt allows Cisco to reduce spending on customer support
   • DIt ensures that Cisco's revenue grows at a constant rate every year
   Reveal Solution Discussion Select an answer first
4. 13expert · hard

   A Cisco account team is managing a customer who has been buying hardware for years but has never purchased a support contract. The team wants to transition the customer to a recurring revenue model. The customer is price-sensitive and worried about ongoing costs. What approach best addresses the customer's concerns while advancing Cisco's recurring revenue goals?

   • ASuggest the customer continue buying hardware without support to save money.
   • BPropose a subscription that bundles support and software, emphasizing the long-term value and predictable costs.
   • COffer a one-time discount on the next hardware purchase to encourage loyalty.
   • DOffer a free trial of support for one year, then let the customer decide.
   Reveal Solution Discussion Select an answer first
5. 14expert · hard

   A Cisco business unit is deciding whether to invest in a new cloud management platform. The platform is expected to generate recurring subscription revenue, but it requires significant upfront R&D investment. The business unit must justify the investment to the CFO, who is focused on short-term profitability. Which justification is most compelling?

   • AThe upfront R&D cost will be offset by immediate one-time license sales.
   • BThe R&D investment will reduce the need for customer support, lowering costs.
   • CThe platform will create a new recurring revenue stream that will fund future innovation and increase the company's valuation.
   • DThe platform will allow Cisco to stop investing in other product lines.
   Reveal Solution Discussion Select an answer first
6. 15application · medium

   A Cisco account manager is working with a customer who is hesitant to commit to a subscription because they fear being locked in. The manager wants to emphasize how the recurring model benefits the customer long-term. Which argument is most aligned with Cisco's recurring revenue strategy?

   • ASubscriptions are a one-time decision that simplifies the customer's IT planning.
   • BSubscriptions are cheaper than perpetual licenses, so the customer will save money immediately.
   • CSubscriptions ensure the customer always has the latest features and security updates, keeping the relationship active.
   • DSubscriptions allow Cisco to ignore the customer after the sale, freeing up resources.
   Reveal Solution Discussion Select an answer first