Cohort Retention

Cohort retention analysis tracks groups of customers who share a common characteristic (typically acquisition month) and measures what percentage of that group continues to purchase or remain active over subsequent time periods. It is the gold standard for understanding customer retention because it reveals the actual shape of customer behavior over time.

A cohort retention table shows each acquisition cohort as a row and each subsequent time period as a column. The values represent the percentage of the original cohort that was still active in that period. This reveals patterns invisible in aggregate metrics: whether retention is improving for newer cohorts, where the biggest drop-off occurs (the "churn cliff"), and how long it takes for retention to stabilize.

Cohort retention curves are essential for LTV projection. By analyzing mature cohorts (those with 12+ months of data), brands can predict the long-term behavior of younger cohorts and project their lifetime value with reasonable confidence. The shape of the curve—steep initial decline vs. gradual falloff—directly impacts LTV calculations and acquisition budget decisions.