Retention Overview

How do I read the Retention Overview, how are the metrics calculated and what insights can I gain from it.

Valentine Strunz-Happe avatar
Written by Valentine Strunz-Happe
Updated over a week ago

tl;dr

There are essentially two factors driving CLV and Retention.

  1. How many of your new customers become repeat customers.

  2. How frequently do your repeat customers buy from you.

This report provides you with an overview of the core metrics measuring these two things and thereby measure the health of your business.

When you find something that you want to investigate further, you can use one of the other reports within the CLV & Retention section.

⚑ Since this is a retention report, the Date Range you define in this report select customers that were acquired in that period, but all activities until today are used to calculate the values. More Information here - Date Range Definition

What can I analyse:

The report is split up into four different sections to give a good overview over the core retention metrics of your business. From there you can jump into more detailed reports and drill down. Let's go over each of these four sections one by one.

Overview

The Overview shows you the core retention and monetization metrics of your customers. These are broken down into 3 different time frame:

  1. AOV & CM2 First Order - The Net Revenue and Contribution Margin 2 of the First Order of New Customers in the selected Date Range.

  2. CLR & CLV 90 Days - The Net Revenue and Contribution Margin 2 of New Customers generated within the first 90 days after a customer has placed his first order (including his first order)

  3. CLR & CLV - The current Net Revenue and Contribution Margin 2 of New Customers from the selected Date Range.

These numbers give a good gauge of whether your customers are coming back and whether you are increasing your profitability over time.

πŸ’‘ A good benchmark for a healthy retention is a CLR/CLV increase of >30% within 90 days and >100% within 365 days.

Now, there are essentially two different ways to increase the CLV of a customer:

  1. Get many customers to come back a few times

  2. Get a few customers to come back many times

  3. A mix of the above

To allows you understand what is driving retention for you (or where you are lacking), we added the next two numbers:

  1. New Customer Repurchase Rate - this is the percentage of your customers at bought at least twice from you. A healthy benchmark here would be >30%

  2. Average Orders per Customers - this tells you, especially in conjunction with the New Customer Repurchase Rate, how frequently a customer buys from you.

New Customer Repurchase Rate

In this section of the report, we want to drill down a bit further into the New Customer Repurchase Rate metric from above by breaking it up into different time period. Within 30, 90, 180, and 365 days.

This allows you to see how quickly your customers are placing their second order. These values are also illustrated in a graph and completed by the Order Time Lag. The Time Lag is the average number of days between the first and the second order of a customer.

Repeat Customer Repurchase Rate

This section of the report is fairly similar to the prior one, only that we focus on Repeat Customers here - so customers that have at least placed two orders already.

The Repurchase Rates tell you how many of your Repeat Customers place a reorder within a certain time period and the Time Lag the average number of days that lie between these orders. Same as above.

In this section, we also added the CLV, which will be different to the CLV from the overview section as here we only look at customers that have placed at least two orders whereas the CLV in the overview also contains all your customers that have only placed one order and therefore drive down your average CLV.

What is different in this section to the New Customer Repurchase Rate section, is the added Repeat Order Filter (see nth Order Rate) which allows you to only select a subset of your repeat customers based on the number of orders that they have placed .

For example, if you set the range from 2-6, the report will show you the Repeat Rates and Time Lag from the 2nd to 3rd, 3rd to 4th, 4th to 5th and 5th to 6th order.

The CLV will be set by customers that have reached at least the minimum number of order in the range. So, if we select 2-6, nothin will change, as all repeat customer will have placed at least two order. Otherwise they wouldn't be repeat customers.

When we change the range to 4-6m the CLV will increase as a customer would have needed at least 4 orders to be included in the CLV calculation. That is two additional orders that should always increase your profitability.

πŸ’‘ The Repeat Repurchase Rate in most cases should be higher than the New Customer Repurchase Rate.

If you have convinced someone to come back ones, it is quite likely that they come back for a third time. However, you might find that the Time Lag increases. This can be perfectly normal. Reasons include that people are initially more enthusiastic about your product and immediately want to order more. Or maybe they only ordered a small amount in the first order to try your product but in the second order they ordered more which will last them longer.

Repeat Order Probability

This section illustrates the point it made just now. It shows you the percentage of customers that have placed an order based on their existing order count.

Sounds confusing? No problem, let clear it up with an example:

If the blue bar with the value 4 on the x-axis shows 76.5%, that simply means that 76.5% of all customers that placed 4 orders also placed a 5th

In almost all cases, the percentage value should increase along the x-axis. If not, there are two options:

  1. You don't have a lot of customers yet that have placed a high number of orders and thus a few outliers drive down your average

  2. There is something fundamentally flawed and you need to dig deeper.

Note: The verify the number of customers you have in a segment, you can use the "Repeat Order Filter" in the section above and look at the repeat customer count.

What do I do with that?

As we said initially, this report is just an overview that allows you to quickly gauge the quality of your customer retention and measure the effectiveness of your monetisation over time.

If you find something, that looks off ,it will pinpoint you to where you need to look further. Within the Retention section of Klar there are a multitude of additional reports that dive deeper into each KPIs shown here and allow you to analyze them in detail.

So start here, find something that you want to investigate further and then jump deeper into one of the more granular reports.

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