Cohorts & CLTV

Saunder explains how to use Cohorts to understand where you're acquiring customers, at what cost, and at what lifetime value.

What are Cohorts?

I'm Saunder with Triple Whale. I'm excited to show you one of my favorite sections within Triple Whale. So the section we're going to cover today is Cohorts, which is under Customer Insights. What I love about the Cohorts page is it helps you understand where you're acquiring customers, what month you're acquiring customers, at the cheapest cost, as well as the lifetime value behind those customers. So looking at the Cohorts page, the default look will look something like this.

So we're going to check the cumulative box as well as the LTV box. What I'm going to look for initially are outliers within this section, so I'm looking for the highest and the lowest months. And the reason I'm doing that is because it helps me understand the months that we're spending the most to acquire customers and the months that we are spending the least amount to acquire customers.

Month-Over-Month Analysis

So with this specific company, they are in the health and wellness space. We can quickly see within January, February, and March, they are acquiring customers for the cheapest amount. And so that makes complete sense even going into April. What's interesting though is, when we go into August, we can see, well, it is higher than their money months.

They are still acquiring customers for a decent amount. And then we can come in here and see the LTV, so how many of these customers are repeat buying and what the associated revenue is with this? A standard within e-commerce is we typically like to see a 30% LTV by month three and 100% LTV by month 12. That's a great standard to put in place to really measure the effectiveness of your lifecycle marketing, which is email and SMS.

Looking at August here, we'll just look at this month, I put a little formula, we'll put a little formula in here, to look at the percentage increase. I just took that total in month three minus the new customer acquisition costs. Oh, hold on, divided by. And this will give us our percentage.

What's awesome to see with this brand, they're seeing a 46% increase in their LTV revenue by month three, so they're blowing that standard out of the water. Phenomenal job on that front. They're literally crushing it. And we could do the same thing going all the way down to month 12, looking at $119.80. So just a phenomenal job from this.

If you scroll down, you can also see the averages.

So then you can just easily come and compare how those months are doing. Obviously, the further along we get in the year, the less data we have since we're currently in July. But this is just a great way.

Budget Planning with Cohorts

If I'm doing my marketing planning my ad budget, I know I'm probably going to be ramping up a good amount in January, February, March, and April just based on my brand when my customers are purchasing, based on my acquisition costs here. But I'm also going to probably look at August.

Since most customers are probably going to come back and buy during these months, and August has your lowest costs, I probably would bump my budget up by 10% to 20% in August just because I'm going to be able to increase my LTV during these later months. That's how I'm going to use this Cohorts section. Now, you can also analyze in a simpler way. We just did the math, but you can come in here, and over the last six months we can see that first purchase, AOV, and then what our 90 day LTV is looking like.

Before we were seeing that 46% increase, we can see over the last six months that their average has been closer to 32%, so still higher than that benchmark or that standard that we typically see with 30%.

Maybe they've changed up their acquisition efforts, investing maybe more in influencer marketing, or investing in paid different channels. So that's could be the reason why their LTV has gone from that 46% down to that 32%. So this also just helps you better measure where your efforts are going, what products are actually working, and those types of things.

Hopefully, this section was helpful, how to use the cohorts, how to use the LTV 60 and 90 to crosscheck that and just get some easier percentages. You can also come down here and see which products are driving the highest AOV and LTV.

So that's how I would use this section as a marketer.

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