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Cohorted Retention groups customers by sign-up period (cohorts) and tracks how they retain over time.
Cohorted Retention for period x = ARR (or count) of customers in a given cohort in period x ÷ ARR (or count) of customers originally in that cohort
Example: The January 2023 cohorts month 3 NDR = ARR from the Jan 2023 cohort in April 2023 / ARR from the Jan 2023 cohort in Jan 2023
You can also look at the weighted average retention of all cohorts at a certain age, such as month 12.
Example: Weighted Average 12 Month NDR = ARR from all cohorts at least 12 months old in month 12 / the original ARR from all cohorts at least 12 months old
Retention by cohort is important because it allows you to see how customers behave at specifics points in the customer journey. SInce many SaaS companies sell annual contracts, looking at retention at months 12, 24, 36, etc help show how renewals impact retention. When projecting how new customers will behave, cohorted retention helps show what they have done historically: early expansion followed by flattening out, early churn that levels out after a few months, etc. Reading cohorted retention charts diagonally can also reveal what happened at a specific point in time, versus a specific cohort age.
Types: Net Dollar Retention, Gross Dollar Retention, Logo Retention
Settings: Segments, Date Range, Date Aggregation, Cohort Retention Baseline, Revenue Type
