What are the differences between Month-over-Month (MoM) Retention and Customer Retention by Cohort and Orders per Month?

What is Month-over-Month Retention?

MoM retention is a measurement that shows you the percentage of customers that are retained from month to month; it's the opposite of your churn rate. To calculate your MoM retention, simply subtract your churn rate from 1. Let's say you have a churn rate of 10%. Using our formula, your retention rate is 90%.

MoM looks at the previous rolling 30 days for anyone who made a purchase, not just new customers. Questions like, "Did they come back in the past 30 days and make another purchase?" can be answered as it includes all customers.

Customer Retention by Cohort

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. Customers are put into a monthly cohort when they first make a purchase, so Peel will only include new customers from that cohort, not all 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.

When looking at the months and year running vertically on the left, you'll see the month a customer was acquired, also defined as when they made their first purchase. A customer will always be associated with the month they made their first purchase, even if they purchase every nine months for instance.

Peel does not have a cut off date after which churned customers are considered to be new: customers only ever belong to a single cohort. As you look to the right horizontally, you see the retention rate so far for each month for that monthly cohort. It is a number that changes as each month goes by because you are still retaining or churning people as time goes on. The percentages go down only when customers stop purchasing in the future.

What is Number of Orders per Month?

Number of Orders per Month is a cohort retention metric that tells you how many of your customers, per monthly cohort, are making orders in the subsequent months beyond their first purchase. With this, you can see the cohort's number of first month purchases and the number of purchases that same cohort made in each month after that.

How to Increase Number of Orders per Month

This metric is one of the best places to start when you want to hyper-target your customers to boost your repurchase rate. By knowing how much your monthly cohorts are expected to spend for months to come, you can adjust your marketing tactics. The idea is to find the sweet spot for engaging your customers after the right amount of time, with the right product suggestions (based on their purchase data), to get them to make more frequent purchases.