Cohort analysis
Cohort analysis groups customers by a shared start point (e.g. first-order month) and tracks their behaviour over time.
Cohort analysis groups customers by when they first bought — their acquisition cohort — and follows each group's spending and retention over the following weeks or months. Instead of a single blended average, you see whether customers acquired in March behave differently from those acquired in June. It's the clearest way to tell if retention is genuinely improving, because it isolates each cohort from the noise of new-customer growth.
How it's measured
Assign each customer to a cohort by first-order period, then measure orders or revenue from that cohort in each subsequent period.
Related terms
Repeat purchase rate
Repeat purchase rate is the share of customers who have placed more than one order.
Churn rate
Churn rate is the share of customers who stop buying over a given period.
Customer lifetime value (CLV / LTV)
Customer lifetime value is the total revenue (or profit) a customer generates across their entire relationship with your store.
RFM analysis
RFM (Recency, Frequency, Monetary) scores customers on how recently and often they buy and how much they spend, to segment them for marketing.