How do you calculate order frequency?
Order frequency is a metric that measures how often, on average, customers place orders within a specific time period.
To calculate order frequency, follow these steps:
Determine the Total Number of Orders: Count the total number of orders placed by customers within the specific time period you want to measure.
Determine the Total Number of Customers: Identify the total number of unique customers who placed orders during the same time period.
Apply the Formula: Divide the Total Number of Orders by the Total Number of Customers.
The formula for calculating order frequency is as follows:
Order Frequency = Total Number of Orders / Total Number of Customers
For example, if there were 500 orders placed by 200 unique customers within a specific time period, the calculation would be:
Order Frequency = 500 / 200 = 2.5
Therefore, the order frequency in this example would be 2.5.
Order frequency helps businesses understand how frequently customers engage and transact with their product or service. It provides insights into customer behaviour, purchase patterns, and loyalty.
