What is the average defection rate for grocery store shoppers in a local area of a large city if customers spend $60 per visit, customers shop one time per week, 52 weeks per year, the grocery store has a 4 percent gross margin, and the value of a loyal customer is estimated at $3,200 per year

Question

Tony Cabrera

Business

12 September, 08:42

What is the average defection rate for grocery store shoppers in a local area of a large city if customers spend $60 per visit, customers shop one time per week, 52 weeks per year, the grocery store has a 4 percent gross margin, and the value of a loyal customer is estimated at $3,200 per year

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Answers (1)

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Selina Harrell · Answer 1

Average defection rate = 3.9%

Explanation:

Average defection rate is the rate are which customers stop using a companie's products and services.

It could result from move to other competitors.

To calculate use the following formula

Customers per year = Spending per visit * Yearly frequency * Gross margin * (1/Defection rate)

3,200 = 60 * 52 * 0.04 * (1/Defection frequency)

Defection frequency (3,200) = 124.80

Defection rate = 124.80/3,200 = 0.039 = 3.9%