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Definition
A cohort is a group of customers who share a starting point, such as their first order in the same month, and whose later orders are followed from that point. Cohorts separate how new buyers behave from the mix of old and new customers.
Cohort retention in month N = customers who ordered in month N / all customers in the cohortExample with made-up numbers: 1,000 customers first ordered in January. In February, 300 of them ordered again, and in March, 180 of them ordered. Retention in month 1 = 300 / 1,000 = 30 percent. Retention in month 2 = 180 / 1,000 = 18 percent.
How to use it
A cohort table shows how many customers in each group order again in month 1, month 2 and so on. It makes visible whether recent buyers behave like older ones, which a single blended repeat rate cannot show. If a new campaign brings weaker buyers, the weakness shows up in its cohort within a few months.
Define the starting point and the period when you quote a cohort, for example first order in January, with dates in the store's time zone. Month 1 is the month after the starting month. Count each customer once, in the cohort where they started, even if they buy again in later months.
