Cumulative Repeat Purchase Rate by Cohort Chart

This document explains how to interpret and use the Cumulative Repeat Purchase Rate by Cohort chart on your Retention Insights dashboard. This chart is a powerful tool for understanding customer loyalty and the effectiveness of your retention strategies over time.

The chart tracks cohorts of new customers month-by-month and calculates the percentage of those customers who make at least one additional purchase (i.e., become a repeat buyer) over subsequent months.

How to Read the Chart

Y-Axis (Rows - Cohorts):
- Each row represents a distinct cohort of customers.
- A cohort is defined by the month in which customers made their first purchase. For example, all customers who made their initial purchase in "March 2025" belong to the March 2025 cohort.
X-Axis (Columns - Months Since First Purchase):
- The columns represent the number of months that have passed since the cohort's first purchase month.
- Month 0 (or the first column, labeled "Customers"): This column shows the total number of new customers who made their first purchase in that cohort month. This helps you understand the size of each cohort.
- Month 1: Represents the cumulative repeat purchase rate by the end of the cohort's first month. For the March 2025 cohort, this is their repeat purchase status by the end of March 2025.
- Month 2: Represents the cumulative repeat purchase rate by the end of the second month after the cohort's first purchase. For the March 2025 cohort, this is their status by the end of April 2025.
- And so on for subsequent months.
Cell Values (Percentages):
- Each cell at the intersection of a cohort (row) and a "Months Since First Purchase" (column) shows the cumulative percentage of customers from that specific cohort who have made at least two purchases up to that point in time.
- Cumulative means that if a customer made a second purchase in Month 1, they are still counted as a repeat purchaser in Month 2, Month 3, etc.

Understanding the Calculation

The percentage in each cell is calculated as:

(Number of customers in the cohort who have made AT LEAST TWO purchases by the end of that specific month) / (Total number of customers in that cohort)

Example:

Let's say the June 2024 cohort had 146 new customers.

End of Month 1 (End of June 2024): If the chart shows 22%, it means that 22% of the original 146 customers (approximately 32 customers) had made at least two purchases by the end of June.
End of Month 2 (End of July 2024): If the chart shows 35%, it means that 35% of the original 146 customers (approximately 51 customers) had made at least two purchases by the end of July.
End of Month 3 (End of August 2024): If the chart shows 38%, it means that 38% of the original 146 customers (approximately 55 customers) had made at least two purchases by the end of August.

Important Note on "Repeat Purchaser":
A customer is counted as a "repeat purchaser" in this chart as soon as they make their second purchase. It doesn't matter if they subsequently make 5, 10, or 50 more purchases; for the purpose of this specific metric, they are counted once as having become a repeat purchaser. This provides an "equal weighting" to all customers who meet the repeat purchase criteria.

Key Benefits & Use Cases

Compare Cohort Performance:
- Easily compare the long-term value of different customer cohorts. For instance, you can look at the "Month 3" column and see how the repeat purchase rate for the January 2025 cohort compares to the March 2025 cohort after both have had three months to make repeat purchases. This allows for an "apples-to-apples" comparison of retention effectiveness, even though their "Month 3" occurs at different calendar times.
Analyze Impact of Marketing & Promotions:
- See if customers acquired during specific promotions (e.g., a large summer sale) have better or worse long-term retention compared to customers acquired at other times.
- Evaluate the retention of customers acquired during holiday periods (e.g., November Black Friday/Cyber Monday cohort vs. December Christmas cohort).
Track Retention Strategy Effectiveness:
- Monitor if your overall retention efforts are improving over time. Ideally, you want to see newer cohorts performing better (higher percentages) than older cohorts at the same "Months Since First Purchase" interval.
- The heatmap (colors and numbers) helps you quickly identify strong or weak performing cohorts and time periods.
Understand Customer Lifecycle:
- Observe how quickly new customers convert to repeat purchasers and how that behavior evolves over their first year or more.

Things to Keep in Mind

Focus on "At Least Two Purchases": The chart specifically tracks the transition from a first-time buyer to a repeat buyer (making a second purchase or more). It doesn't differentiate between a customer who bought twice and one who bought ten times.
Cohort Size Matters: When comparing percentages, also consider the absolute number of customers in the cohort (from "Month 0" or the initial cohort size column) to understand the statistical significance.
Cumulative Nature: The percentages in later months for a given cohort will always be greater than or equal to the percentages in earlier months for that same cohort, as it's tracking cumulative behavior.

This chart serves as a valuable scoreboard for your customer retention efforts, helping you understand what's working and where there are opportunities for improvement.