How To Calculate Customer Cohort analysis in Wave Accounting | Arithmix

Customer Cohort analysis is a powerful tool that allows businesses to understand the behavior of their customers over time. By grouping customers into cohorts based on the time they made their first purchase, businesses can track how their behavior changes over time. This information can be used to make informed decisions about marketing, product development, and customer retention. In this article, we will explore what customer cohort analysis is, when it is valuable to calculate it, and how to do it in Wave Accounting.

What Is Customer Cohort analysis?

Customer Cohort analysis is a method of analyzing customer behavior over time. It involves grouping customers into cohorts based on the time they made their first purchase. By tracking the behavior of each cohort over time, businesses can gain insights into how their customers behave and how their behavior changes over time. This information can be used to make informed decisions about marketing, product development, and customer retention.

For example, let's say you run an online store that sells clothing. You might group your customers into cohorts based on the month they made their first purchase. You could then track the behavior of each cohort over time, such as how often they make purchases, how much they spend, and what products they buy. By doing this, you might discover that customers who made their first purchase in December tend to spend more money than customers who made their first purchase in January. Armed with this information, you could tailor your marketing efforts to target December customers more heavily.

When Is It Valuable To Calculate Customer Cohort analysis?

Customer Cohort analysis is valuable for any business that wants to understand how their customers behave over time. It is particularly useful for businesses that have a lot of repeat customers, as it allows them to track how customer behavior changes over time. It is also useful for businesses that want to improve customer retention, as it can help identify which customers are most likely to stick around and which are most likely to leave.

Here are some specific situations where customer cohort analysis can be valuable:

• You want to understand how customer behavior changes over time
• You want to identify which customers are most valuable to your business
• You want to improve customer retention
• You want to identify trends in customer behavior that can inform product development

How to Calculate Customer Cohort analysis in Wave Accounting

Wave Accounting is a popular accounting software that can be used to calculate customer cohort analysis. Here's how to do it:

1. Export a list of all your customers and the dates of their first purchases
2. Group your customers into cohorts based on the month they made their first purchase
3. Calculate metrics for each cohort, such as average order value, repeat purchase rate, and customer lifetime value
4. Track how these metrics change over time for each cohort
5. Use this information to make informed decisions about marketing, product development, and customer retention

By following these steps, you can gain valuable insights into how your customers behave over time and use this information to grow your business.

How Do You Calculate Customer Cohort analysis in Wave Accounting

Wave Accounting itself isn’t naturally geared towards letting you calculate complex metrics like Customer Cohort analysis. As an alternative, teams typically use products like Arithmix to import data from Wave Accounting and build out dashboards.

What is Arithmix?

Arithmix is the next generation spreadsheet - a collaborative, web-based platform for working with numbers that’s powerful yet easy to use. With Arithmix you can import data from systems like Wave Accounting, combine it with data from other systems, and create calculations like Customer Cohort analysis.

In Arithmix, data is organized into Tables and referenced by name, not by cell location like a spreadsheet, simplifying calculation creation. Data and calculations can be shared with others and re-used like building blocks, vastly streamlining analysis, model building, and reporting in a highly scalable and easy to maintain platform. Data can be edited, categorized (by dimensions) and freely pivoted. Calculations are automatically copied across a dimension - eliminating copy and paste of formulas.

Arithmix is fully collaborative, giving your entire team access to your numbers and the ability to work together seamlessly.

Calculating Customer Cohort analysis in Arithmix

Calculating metrics like Customer Cohort analysis is simple in Arithmix. Once you've created your free account, you’ll be able to import your Wave Accounting data, and use it to create natural language formulas for metrics like Customer Cohort analysis.

Arithmix is designed to give you the power to build any calculations you want on top of your Wave Accounting data, while also being easy to use and collaborate on. You can share your dashboards with users inside and outside of your organisation, making it easy to empower your whole team.