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Assessing customer retention in B2C electronic commerce: an empirical study

Author

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  • Eugenia Y. Huang

    (National Chengchi University)

  • Chia-jung Tsui

    (National Chengchi University)

Abstract

In the challenging environment of the transparent electronic marketplace in which competitors are only a click away, Web retailers are particularly vulnerable to customer attrition. Central to business growth and survival, customer retention is an important issue that every business strives to understand and harness. While some studies have attempted to determine the factors that influence customer retention, few measure it quantitatively. However, businesses have long been eager to have quantitative information concerning their customer base: How many of their customers they can consider retained at any given time? What time lapse should trigger an alert that the customer may have defected? Based on real purchasing data from a Web retailer, and using 80 percentage of assurance as an example, this paper proposes a customer retention assessment method by calculating the aggregate 80th percentile of maximum inter-purchase times and confirms the validity of this method by showing that the assessment successfully sets apart valuable customers, in terms of number of orders, average spending per order, and total spending. This research not only enables researchers to undertake longitudinal studies of customer re-patronage behavior, but also helps practitioners monitor customer retention effectively.

Suggested Citation

  • Eugenia Y. Huang & Chia-jung Tsui, 2016. "Assessing customer retention in B2C electronic commerce: an empirical study," Journal of Marketing Analytics, Palgrave Macmillan, vol. 4(4), pages 172-185, December.
    • Handle: RePEc:pal:jmarka:v:4:y:2016:i:4:d:10.1057_s41270-016-0007-x
    DOI: 10.1057/s41270-016-0007-x
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    References listed on IDEAS

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    1. Sander Triest & Maurice Bun & Erik Raaij & Maarten Vernooij, 2009. "The impact of customer-specific marketing expenses on customer retention and customer profitability," Marketing Letters, Springer, vol. 20(2), pages 125-138, June.
    2. Ruth N. Bolton, 1998. "A Dynamic Model of the Duration of the Customer's Relationship with a Continuous Service Provider: The Role of Satisfaction," Marketing Science, INFORMS, vol. 17(1), pages 45-65.
    3. Mats Larsson & David Lundberg, 1998. "The Transparent Market," Palgrave Macmillan Books, Palgrave Macmillan, number 978-1-349-27018-7.
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    Cited by:

    1. Robin Gubela & Artem Bequé & Stefan Lessmann & Fabian Gebert, 2019. "Conversion Uplift in E-Commerce: A Systematic Benchmark of Modeling Strategies," International Journal of Information Technology & Decision Making (IJITDM), World Scientific Publishing Co. Pte. Ltd., vol. 18(03), pages 747-791, May.
    2. Gubela, Robin & Bequé, Artem & Gebert, Fabian & Lessmann, Stefan, 2018. "Conversion uplift in e-commerce: A systematic benchmark of modeling strategies," IRTG 1792 Discussion Papers 2018-062, Humboldt University of Berlin, International Research Training Group 1792 "High Dimensional Nonstationary Time Series".

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