The Cohort Analysis Hop is a time-based cohort analysis report used to measure customer retention on a monthly basis. It analyzes the proportion of newly acquired customers who make repeat purchases in subsequent months. Examining customer retention is crucial because acquiring customers is more expensive than retaining them.
On the column headings, M0 = month zero, M1 = month one, and so on.
The above result can be interpreted as follows:
16.2% of newly acquired customers in May 2023 (M0) made a purchase in June (M1), 29.7% of the customers newly acquired in May made a purchase in July (M2).
You can also combine this with other data to draw conclusions. Let’s say you ran a discount campaign in July (M3), and from this cohort analysis you notice that 83.8% of customers acquired in May made purchases. This indicates that you were able to win back the majority of your customers acquired in May with your discount campaign in July. This also implies a lower CAC and a higher LTV due to your July campaign.
It is important to note that this report requires at least 6 months of sales data.
How to use this Hop.
Simply create an Airboxr account and connect your Shopify store to automatically run this export/analysis for your store. If you already have an account, click on the Add to my Collection button above.
Optimizing Marketing Strategies: Identifying the proportion of newly acquired customers who make repeat purchases makes it possible to evaluate the effectiveness of marketing campaigns. If a specific cohort shows higher retention rates, it indicates the success of the marketing strategy used to acquire those customers. Businesses can then replicate these successful strategies in future campaigns.
Feedback Loop Improvement: Cohort analysis offers insights into customer behavior after specific marketing initiatives, such as discount campaigns. If a cohort exhibits a high retention rate following a discount campaign, it indicates that discounts are an effective incentive for these customers. This feedback informs future marketing strategies, allowing businesses to refine their discount offers or promotional tactics for better results.
Customer Lifetime Value Enhancement: By understanding which cohorts have higher retention rates, businesses can focus on nurturing these relationships. Loyal customers tend to have a higher lifetime value, making it crucial for businesses to invest in customer retention strategies.
In This Report