Question

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

Answer 1

Answer:

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%