In a few weeks, we’re preparing to release a revamped analytics experience for Stamped Loyalty. One of the pieces I’m most excited about is our new Retention Insights section focused on cohort behavior.
To explain why, it might be worth taking a step back for a second.
Our core hypothesis at Stamped is that user-generated content and loyalty programs generate more business impact as combined levers in a merchandising strategy than they do on their own. This is, in part, why we acquired Repeat: To be the engine that integrates the two, and does so in a personalized manner. We believe personalization drives profits by improving repurchase frequency and AOV from your existing customers.
But how do you measure that?
Our Retention Insights section is the first step in our efforts to help brands get a better handle on this, by showing how customer cohorts expand their spend over time.
Here’s one example of what this will look like:
In this chart, we’re showing how a brand’s newly acquired customers from January compare to customers who were acquired in previous Januaries (2023 and 2022). A year-over-year comparison of the same month like this helps understand longer term trends in retention behavior while controlling for business seasonality.
This is, in short, a diagnostic chart. It will not give you the answers to your business, but it will report on how your strategy is worth and tell you where to look for answers.
And, immediately, you can see a few things:
The 2024 cohort of customers had higher initial revenue
That initial revenue advantage has eroded over time, especially compared to the 2022 cohort
All cohorts have seen softening month-over-month trends in the last two months
So, what good is seeing this?
For starters, it can lead to more probing questions to get at the heart of what’s working and what’s not in the business:
This brand has done a good job of increasing AOV with new customers. What’s changed here in the last year? What new merchandising strategies have they employed?
That initial revenue advantage has eroded over time. In fact, this cohort has flattened out faster than either the previous two cohorts and, by month 6, the 2022 cohort is worth more than the 2024 cohort. Did this brand get customers to overspend before they were sold on the product, leading to lesser retention rates?
With softening month-over-month trends in the last two months, is that due to something within the brand’s control (Did they change their email/SMS strategy? Did they sell out of a key product?) or something outside of their control (Is consumer demand for this product softening?)
Given the initial trajectory change differences between the three cohorts, how is discounting playing into this? Is the change we see more about AOV or purchase frequency? Is a higher initial AOV tied to a lower purchase frequency over time?
Is what these cohorts are buying changing over time?
Merchandising, of course, is a lever businesses pull to tackle many of the questions above.
What I’m excited about is helping brands more readily ask those questions. And if we do that well, we’ll be in a better position to show them where—and how—Stamped fits in answering them.