Your business is always acquiring some new customers and losing others. In order to improve your business you’ll need to understand what is working and not working and how it is impacting those customers. Cohorts are a great way to keep track of the performance of your customers. By tracking groups who registered or purchased in a particular period of time and then seeing how their doing at a later point, you can see how many are no longer active. You can also see what their activity is at different points in time. Maybe you have customers that buy only once a year, but do so in a predictable manner.

For example: In June, you acquire 100 customers, the following month 10 of them shop again, and the following month 10 shop again. You can calculate how many of the 10 repeated and what the total frequency and dollar value of the original hundred customers is. You can compare that to the group of customers you acquired in May or the prior June.

Check out this article from Periscope.io about How To Calculate Cohort Retention in SQL.

You can also check out how to do cohorts in Tableau.