Customer Cohort Analysis

I worked on a case study for a fictional company that sells data to her clients.

The objectives of this data analysis as a growth marketer was to determine the retention rate, customer lifetime value, cost of acquisition of a customer and determine ways to increase revenue for the company.

It was a very interesting case study as it relates to the daily challenges faces by businesses in today’s competitive and dynamic market.

From the dataset I was able to analyse and come about these insights:

· From the retention cohort analysis of the slumbase sales data for the period of January 2017 to December 2017.

· We can see from the model that a total of 8383 users was acquired in the year 2017. 559 customers in January, 664 in February, 734 in March… and 841 in December

· In January, the number of customers acquired was 559, but only 35 were retained in the next month out of 559.

· Similarly, in month 2, only 28 customers were retained, in month 3 the number of users increased to 40 and in month 12 we only have 1 user left.

· The highest average retention of 4% was acquired in month one, compared to other months which averages between 2% to 3%.

Below are the glossary of words and their meaning

· Cohort analysis is a type of behavioural analytics in which you group your users based on their shared traits to better track and understand their actions. Cohort analysis allows you to ask more specific, targeted questions and make informed product decisions that will reduce churn and drastically increase revenue.

· The lifetime value of a customer, or customer lifetime value (CLV), represents the total amount of money a customer is expected to spend in your business, or on your products, during their lifetime.

· Customer Acquisition Cost (CAC) is the cost of winning a customer to purchase a product/service. As an important unit economy, customer acquisition costs are often related to customer lifetime value (CLV or LTV).

· With CAC, any company can gauge how much they’re spending on acquiring each customer. It shows the money spent on marketing and other things to acquire a customer. Keep an eye on CAC so it doesn’t get out of control. For example, no rational company would spend $500 to acquire a new customer with an expected LTV of $300 because it would drain $200 of value per customer acquired.