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4 

The total number of customers.

5 

The customer 

churn rate

.

As would be expected intuitively, modelling using these variables indicates that for compa‑

nies with a similar revenue per customer, contribution margin and advertising costs, it is the 

churn rate that will govern their  long‑  term success. To look at this another way, given the 

high costs of customer acquisition for a new company, it is the ability to retain customers for 

repeat purchases which governs the  long‑  term success of companies. This then forces  dot‑ 

 com retailers to compete on low prices with low margins to retain customers.

A structured evaluation of the success and sustainability of UK Internet  start‑  ups has 

been undertaken by management consultancy Bain and Company in conjunction with 

Management Today magazine and was described in Gwyther (1999). Six criteria were used to 

assess the companies as follows.