Grouping customers by shared characteristics (e.g. acquisition month) to compare behavior over time.
Cohort analysis groups customers who share a common characteristic (typically their first purchase month) and tracks their behavior over subsequent periods. This reveals trends that aggregate metrics hide.
Aggregate metrics can be misleading. Your overall retention rate might look stable, but cohort analysis could reveal that recent cohorts are churning faster — a problem hidden by the loyalty of older customers.
January cohort: 100 new customers. By month 3, 40 have repurchased. By month 6, 55 have repurchased. Compare this to February's cohort to see if retention is improving.
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