Using Cohort Analysis to Retain Customers and Drive Repeat Purchases

Cohort analysis is a valuable, yet often overlooked tool in marketing analytics. Marketers’ results are often judged by the revenue their campaigns generate in a specific period. While some businesses understand the importance of differentiating new vs. repeat sales, this alone is not sufficient for a comprehensive understanding. This article will demonstrate how to utilize the cohort report in Elly Analytics and explain why it is even more critical today than in the past.

Long-Term Business Success Depends on Repeat Customers

Advertising costs are increasing across all ad platforms due to the adoption of auction-based models for determining prices. In these models, prices tend to rise more often than they fall. Furthermore, Apple’s privacy changes are disrupting the advertising industry by making it more challenging to track ad effectiveness on iOS devices. These factors collectively contribute to the rising cost of acquiring new customers. Businesses that fail to cultivate a base of loyal, regular buyers and solely focus on acquiring new ones are likely to face challenges.

How to Build a Strong Customer Base Using the Cohorts Report in Elly Analytics

Let’s explore the two primary configurations for setting up the Cohort report: ’from left to right’ and ’from right to left.’ These terms are visually intuitive, making them easier to remember.

In the ’from right to left’ configuration, each line represents a cohort by the month of the first purchase, and each column indicates a month’s revenue. Revenue from cohorts of customers is summed from the top to the bottom in the Total line. For example, in November 2021, $49,902 was earned, but only $391,241 was revenue from first-time customers. By examining the data from the bottom to the top, you can discern how much revenue was generated by customers from previous months’ cohorts. This setup clearly shows whether the revenue came from new or existing customers.


In the ’from left to right’ configuration, each line is a cohort, and it displays how much those customers are purchasing in subsequent months as a percentage of the total amount of revenue from first purchases. The numbers in the first column may exceed 100% because some customers make more than one purchase in the initial months. This configuration of the Cohort report clearly indicates how effectively you are encouraging your customers to make repeat purchases.


In this report, we see that until mid-2022, the business struggled to encourage repeat purchases — it used to take over 24 months for a cohort’s revenue to double from its initial month. However, the situation has significantly improved since mid-2022, thanks to enhanced efforts in customer retention. From that point, it takes only about 12 months for a cohort’s revenue to double. This efficiency allows the business to invest more in acquiring new customers, as it recovers the investment quicker. Reports like these are crucial for monitoring repeat purchase rates and evaluating the success of strategies aimed at motivating customers to make additional purchases.

Customers with different attributes often show varied behaviors — some may become repeat buyers, while others make a single purchase and do not return. By breaking down data by source, location, or first product bought, you can spot the traits of an ideal customer and focus your marketing efforts on those likely to have a high Lifetime Value (LTV).


How to Make Data-Driven Decisions Faster

Since collecting enough useful data takes time, try these to speed things up:

  • Look for Early Signs: Find quick indicators like first-week sales or the number of top-tier new customers to guess future success of a campaign.
  • Use Predictions: Apply machine learning to predict which new customers will likely make more purchases later.

In Short

  • The key to lasting business success is a steady stream of customers who buy again and again. Elly Analytics helps by pinpointing where and how you’re getting these valuable repeat customers.
  • Have someone on your team focus on boosting repeat sales, and use Elly Analytics to track how well they’re doing.
  • Elly Analytics can also predict which new customers are likely to become repeat buyers, helping you make quicker, more informed marketing decisions.

By applying these strategies and insights from Elly Analytics, any business can more effectively attract and retain the customers that are most crucial to its success.