What is the Metric?
Customers Returning Rate by Cohort tells you what portion of your customers from each cohort are coming back to make purchases in subsequent months. You can view this in either % or the actual # of returning customers.
This provides you not only the predictive power of how you can expect those monthly cohorts to perform over time, but it also reveals trends in your customers’ purchasing behavior that you can leverage to engage them with marketing content at the right time.
How Can You Use this Metric?
Have a highly consumable product that has built-in demand for refills through repurchase? This is the metric that can help you understand just how quickly your customers are coming back for more.
Or, maybe you’re working on a strategy where you have a product that works as a gateway to other products on your site. This metric can help you understand when customers are coming back for their second purchase and beyond.
Most importantly, your Customers Returning Rate by Cohort metric helps you with the timing of your marketing messages. If you know when your customers are coming back to repurchase, you have a better understanding of when the right message (email or SMS), targeted to the right customer, with the right products featured, has a better likelihood of leading to a conversion.
If you’re looking for more strategies for overall growth, check out our E-Commerce Analytics Guide. Or, watch the video below and read on to learn more about Customers Returning Rate.
Customers Returning Rate Use Case
Let’s jump into an example.
Let’s say our friends at Icarus Suncare are gearing up for their summer season. They know that their famous Don’t Melt Sunblock will start flying into carts and flying off their virtual shelves as summer approaches. They also know that their product has a built-in demand for repurchase. Users will run out of it depending on how much they are using.
They believe that their Don’t Melt Sunblock is the highest driver of sales during the summer months and is increasing their Customers Returning Rate.
Here’s what they don’t know:
- How often their customers are repurchasing
- If their customers are coming back for other products after the sunblock
- Their peak times for reaching out to customers with retention emails
Here’s an example of what their Customers Returning Rate by Cohort looks like:
As we can see, they have a high Customers Returning Rate from late Spring through the Summer months. Just based on this, we know that they have an opportunity to re-engage their customer base to try and drive more conversions.
Looks like they have a solid amount of customers coming back to make purchases about once a month to every six weeks from May to September. To confirm their theory that the Don’t Melt Sunblock is their biggest driver of repurchases, we can segment their Customers Returning Rate by products.
Sure enough, it’s the sunblock that keeps customers coming back every 4-6 weeks. Here are some ideas of how Icarus Suncare can translate this information into impactful action:
- Create an email drip campaign that hits customers who’ve purchased the sunblock with helpful content, reminders to refill, and maybe even incentives to purchase (a small discount or free shipping) between 3-5 weeks after each of their purchases.
- Use SMS to announce restocks of the sunblock or new special promotions that include the product that are delivered to customers who haven’t yet repurchased in the expected window.
With the right timing driven by the Customers Returning Rate by Cohort metric, Icarus Suncare can deploy these strategies and more to try and maximize the value of their customers. From there, they can see which messaging and timing work the best and continue to improve their strategy.
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