The TL;DR:

• Let’s Chat D2C: What is Cohort Analysis and Why Does it Matter?

• What I’m Thinking about this Week: Take a sneak peek at some upcoming content and resources, and submit your requests with this form!

• The D2Z Podcast: In this week’s episode, I sat down with Matt Goodman, Co-Founder & CEO of Okendo, a customer marketing platform building connections between brands and consumers.

• App Highlight: Relo - Repeat Revenue platform for CPG brands to increase repeat purchase rate and paid subscription growth.

• Upcoming Events: En route to South Carolina today and then hosting my AMA on 9/26 at 130PM EST!

Also, you can now easily share this newsletter with a friend! As you refer, you earn:

• 3 Referrals: A Free Tech Stack Audit

• 5 Referrals: A Free Website Audit

• 10 Referrals: A Free 30-minute Consulting Session

Let’s Chat D2C - What is Cohort Analysis and Why Does it Matter?

What is Cohort Analysis?

Cohort Analysis: Analytical technique that categorizes and divides data into groups with common characteristics before analysis.

Cohort analysis allows you to understand nuances of customer behaviors and buying patterns for specific groups of like customers.

Example Cohorts in Ecommerce

There are various ways to break your customers down into specific cohorts to provide a better understanding of how different types of customers engage with your brand and impact your business metrics:

• Acquisition Channel

• Acquisition Offer

• Acquisition Date (i.e., Month and Year)

• Products Purchased

• Country

Metrics to Analyze in Cohort Analysis

Repeat Purchase Rate

The repeat purchase rate allows you to see what % of customers come back and place at least a 2nd order, a critical metric for determining the health of a particular customer cohort. Once you know which cohorts have the highest repeat purchase rate, you can target them more aggressively.

Orders per Customer

Especially relevant for subscription businesses, how do your cohorts compare when assessing the number of orders they place over the course of their lifetime with the brand?

Time between Orders

Not all cohorts will order at the same frequency. Tailor your marketing strategy and communications around when that particular customer group will be most likely to reorder again.

Customer Lifetime Value (LTV)

The ultimate metric - LTV. How much is an average customer in a specific cohort worth to your business over the course of their lifetime with you? The higher the LTV, the better.

Benefits of Cohort Analysis

Improve Retention

Are most of your customers in a particular cohort churning before the 3rd order? Implement proactive messaging in the customer experience to get them to come back for order #3 (i.e., get a free gift in your 3rd order automatically).

Best Acquisition Channels

Customer acquisition cost (CAC) isn’t the only metric that should be used when determining your best acquisition channels. Use cohort analysis to see which acquisition channels are producing the highest LTV.

Identify Best Products

Which of your products generates the most sales and leads to the most new customers, produces the highest LTV, and leads to the most repeat orders?

Predict Behavior

A majority of cohort analysis tools on the market now offer the ability to see predictive analytics on your cohorts (i.e., how much will the customers be worth to the business for the rest of the year?)

Seasonal Shoppers & Discount Buyers

Are your BFCM customers and discount campaigns providing temporary blips in sales, or are they generating high-value customers?

Optimized Offers & Subscriptions

Group cohorts by discount codes used as a first-time customer and see how they rank against each other regarding LTV. Understand which discounts will provide you with a short-term influx of cash and which discounts will acquire you high LTV customers.

An Example of Why Cohort Analysis is So Important

Let’s say you’re running two different intro offers on Facebook, one for 10% off the first order and one for 15% off the first order. If you simply analyzed all Facebook customers together, you’d have no idea what the repeat purchase rate and LTV is of the 10% off customers versus the 15% off customers.

In this instance, you’d assume the 10% off customers would actually cost more to acquire on Facebook than the 15% off, and brands might opt to shut the 15% off campaign down immediately, but what if their repeat purchase rate and LTV are actually higher?

Cohort analysis allows us to be comfortable spending $50 to acquire the 10% off customers despite it costing $5 less to acquire the 15% off customers because the LTV of the 10% off customers is $30 more than the LTV of the 15% off customers.

What I’m Thinking About This Week - Upcoming Content Ideas

I’ve been working on putting together a running list of content ideas that our community will find helpful. Here is a sneak peek of what’s to come:

• Walkthrough videos of Triple Whale, Superfiliate, Rebuy, Okendo, and the Shopify Admin

• Email Design 101

• Email Dark Mode

• Lead Capture/Pop-up Strategies

• Shipping Guide and Managing Expectations

• Pinterest Marketing Guide

• Klaviyo CDP Guide

• Prompt Engineering 101

I want to create content that YOU find helpful! So, I put together this form where you can submit your requests!

This Week’s The D2Z Podcast

#74 – Tackling Rising Customer Acquisition Costs with Okendo

🎧 Listen Now 🎧

In this week’s episode, I sat down with Matt Goodman, Co-Founder & CEO of Okendo, a customer marketing platform building connections between brands and consumers. Specifically, we explored the following:

💰 How Okendo solves merchant pain and drives ROI

📲 How the platform has evolved over time and why

😎 What a superfan is and why brands should care

🚀 Okendo’s product releases and upcoming roadmap

App Highlight - Relo

❓ What is it: Repeat Revenue platform for CPG brands to increase repeat purchase rate and paid subscription growth.

🥇 Differentiator: Relo analyses your Shopify order history and predicts which customers are ready to replenish, cross-sell, or convert onto a paid subscription on which specific day. These predictions are synced into Klaviyo through dynamic flow triggers, improving the timing and efficacy of your email/SMS.

💰 Starting Price: FREE 30-day trial, with tiered pricing from $250 per month based on Shopify order volume

🚀 How we use it: Growing paid subscribers is an excellent way for subscription brands to scale their LTV fast. Relo automates this by analyzing repeat purchase customers and automatically converting the most engaged ones into Recharge subscribers through a Klaviyo flow triggering email/SMS. Their integration is also available for most other subscription providers (e.g., Skio, Stay AI, Smartrr).

Upcoming Events

I’m en route to South Carolina today and will be there until Tuesday! Then, I’m hosting my AMA on 9/26 at 130PM EST!

October Schedule

LA 10/2-10/6 for the Shopify Enterprise Partner Summit, and Cleveland 10/8-10/11 for the Forbes 30under30 Summit.

Share the Newsletter with a Friend!