Cohort Analysis
Analyzing customer groups by the time period they first purchased to track retention and LTV over time.
Definition
Cohort analysis groups customers by their first purchase month and tracks their subsequent purchase behavior — revealing how retention rates and CLV evolve for customers acquired in different periods or through different channels.
Why It Matters for Shopify Brands
Cohort analysis reveals whether customer quality is improving or deteriorating over time. If recent cohorts retain at lower rates than older cohorts, it indicates declining product quality, marketing targeting issues, or customer experience problems.
Benchmarks
A healthy brand shows improving cohort retention over time as product and experience improve. Month-3 retention above 20% is a positive signal for most DTC Shopify brands.
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