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Statistics

28 Jun 2001, Germany

Dear Dr. Ecommerce

I am desperately searching for a formula to calculate the churn rate of on-line customers and how to combine this with the approx. orders per year and customer.

Thanks for any suggestions.

Christoph

Dear Christoph:

Churn rate is far too subjective for there to be any hard and fast formula for calculating it. Whether customers remain faithful to an on-line business or not can depend on many things, including:

• Customer service (if your customer service is good, customers are more likely to come back again)

• Usability of web site (if a web site is confusing or difficult to navigate, a customer is unlikely to return unless there are no other competitors)

• Transparency (if you are open and honest about things like privacy, speed of processing orders, shipping rates, etc, customers are more likely to trust you and come back again)

• Good web content (one reason why Amazon became the leading e-shop is because they don't just sell books. They provide interesting content via their on-line reviews)

• Brand recognition (if people remember your name and your business, they are much more likely to come back again and again).

Depending upon your kind of business, there can be other issues that also affect churn rate.

Good luck,

Dr. Ecommerce