Cohort Retention Rate
The percentage of customers from a given cohort (a group defined by first purchase) who remain active over time. Month-1 retention = the percentage who bought again within 30 days. A health indicator for LTV.
In practice
Cohort retention rate is a 'lens on loyalty.' If the January cohort shows 25% month-1 retention, 15% month-2, and 8% month-3 — that's a classic retention curve. When the retention curve 'flattens' (doesn't fall to 0%), there's a core of loyal customers. That's the best sign of product-market fit.
Common misconception
'Retention rate = repeat purchase rate.' Related but different. Repeat purchase rate: the percentage of customers who bought more than once. Cohort retention rate: the percentage who stayed active each month over time. Cohort retention reveals exactly when customers leave.
How to fix it
Low cohort retention? (1) Find when retention drops sharply — month 1? month 3? Each stage has a different explanation, (2) month-1 churn: a product/expectation gap, (3) month 3-6 churn: an engagement/habit problem, (4) build win-back flows tailored to when the cohort typically leaves.
Example
Coffee shop: cohort retention month 1: 32%. Month 3: 18%. Month 6: 8%. Month 12: 3%. Discovered: the biggest drop was between months 1 and 3. Reason: customers didn't understand how to brew the coffee. Added recipe emails + video. Month-3 retention rose to 26%.
Priority
Calculate cohort retention rate quarterly. In Klaviyo: Cohort Analysis → Retention. Category targets: coffee/food 35%+ month 1, apparel 20%+ month 1, electronics 10%+ month 1. Below benchmark — investigate.
Related terms
Keep learning. Metrics that touch the same area:
- Cohort AnalysisAnalyticsGrouping customers by a shared characteristic (month of first purchase) and tracking their behavior over time. Reveals real changes that averages can hide.
- Churn RateFinanceThe percentage of customers/subscribers who stopped buying or paying in a given period. High churn means every new customer just replaces an old one. Per Harvard research: cutting churn by 5% increases profit by 25-95%.
- ConversionAnalyticsA desired action a visitor takes — a purchase, sign-up, form submission. The basis for measuring marketing success.
- Conversion Rate (CR)AnalyticsThe percentage of visitors who completed a desired action. Average: 1-4% for purchases, depending on category.
- ATC – Add To CartAnalyticsThe action where a visitor adds an item to the cart. Average ATC rate: 8-10% of product page visits.
- Cart AbandonmentAnalyticsA customer added an item to the cart but didn't complete the purchase. Average: 70-75%. One of the biggest opportunities.
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