Leveraging LTV Cohort Analysis for Ecommerce Growth

For Shopify, having effective marketing campaigns is important to acquire the right customers. Using a cohort retention analysis tool that includes customer lifetime value, and lets you group users by behavior and characteristics lets you do this. In this blog, we’ll discuss how to do a Shopify cohort retention analysis, how to use it to your advantage, and how to avoid common mistakes for growth.

What is Cohort Analysis?

Cohort analysis is a behavioral analysis method that groups customers based on their characteristics or behaviors.

This includes traits such as the customers first purchase date or geographic location. This allows you to understand how different customer segments behave and how effective your marketing efforts are in acquiring and retaining customers.

Why is Cohort Analysis Important?

Cohort analysis shows the long-term view for your business and helps you understand your marketing campaigns’ impact over time. You can see your most effective acquisition channels, products, and also study the behavior of seasonal or discount shoppers.

But what’s the problem with this analysis? It’s under-utilized, and many ecommerce businesses miss out on valuable insights.

Performing Cohort Analysis

1. 1. Choose your approach:
      The two types of cohort analysis are time-based and event-based.
      Time-based cohorts group customers by when they made their first purchase, signed up, or became a member.
      Event-based cohorts group customers by specific behaviors, such as clicking on a particular ad or purchasing a specific product.

1. 1. Define your cohorts:
      Determine the cohorts you want to analyze, such as customers who made their first purchase during a specific promotion or those who responded to a particular marketing campaign.

Using Cohort Analysis for Growth

Here’s a five-step plan of action to use cohort analysis in growing your ecommerce brand:

1. 1. Identify Your Prime Cohorts:
      Identify high CLV cohorts. These cohorts are the main drivers for your business.

1. 1. Discover Your Best Acquisition Channels:
      Which marketing channel seems to work with these high CLV cohorts? Double down here.

1. 1. Optimize Product Offerings:
      What products generate the most revenue for the high CLV Cohorts? Focus on promoting them with your marketing for these groups.

1. 1. Analyze Seasonal Shoppers and Discount Buyers:
      How do Seasonal Shoppers act? How do the Discount Buyers act? Use these behaviours to serve your business.

1. 1. Improve Your Email Marketing:
      An underrated marketing channel. Use cohort analysis to segment your email list and deliver personalized content, increasing engagement and conversion.