How to measure Customer Retention Rate ? Cohort Analysis & Retention Rate Visualization in R
In an Ecommerce business, its important to analyze User Retention over time. Some normal questions we tend to solve-
Are the customers doing more or less repeat purchases over time? OR rate at which we are losing customers getting better or worse?
What is the overall retention rate ? How and when are users returning back after their first purchase?
Are the new customers sticking around for the second, third, fourth, .. month?
What % of the revenue came from new vs. repeat customers? How its changing over time ?
Cohort Analysis is a useful to analyze the long-term trends in customer retention and then calculate CLV (Customer Lifetime Value). So usually we do the analytical approach by calculating life-time value or comparing cohorts.
I have created a dummy data and created cohorts as per the customer’s first purchase month, e.g. january represents the group of people who signed up in january and month (month1,month2,..) the sequence of month in their customer life-time.
Cohort Analysis by Revenue, No. of Active Customers & Average Revenue per customer
