E-Commerce is a fun game. It’s a game that rewards both creative skills and analytical skills. But the game isn’t so fun when your customers keep leaving you. Want to avoid this? A Shopify Cohort Analysis can do that.
More specifically, one that focuses on retention.
There’s a reason why store owners are searching this up, there’s value in this analysis. Value that translates to more high quality customers.
If you can understand a customer’s personality, you understand their real desires for your products.
As your store grows, you’ll see different behaviours amongst all your customers.
It’ll be hard to keep track of them. But if you know how to understand a Shopify Cohort Analysis, you’ll be filled with the right knowledge.
Right now, you’re going to be walked through what a Shopify Cohort Analysis is, the benefits it brings, and how to use it to become the best in your industry.
What is a Shopify Cohort Analysis?
Before you learn how to use the analysis, let’s make sure you understand every angle of it.
A Shopify Cohort Analysis is where you take a group of customers and group them based on a characteristic so you can see the retention of that group.
The best characteristic to group your customers by for retention is by the time they became a customer (first purchase).
Why is this the best trait to group by?
- Behavioural patterns: What’s the difference between customers you acquired during the holidays vs other months? Do the holiday customers behave differently in terms of purchase frequency? Do they have a behaviour of purchasing in high volumes during the holidays?
- Retention Tracking: How do the customers acquired in October act differently than those in May? Is May a better time to acquire customers because they are more active?
- Marketing and Sales Impact: This can show a correlation with marketing efforts. What styles of marketing campaigns helped retain more customers? How can we optimize our campaigns to increase our retention?
Why Is the Shopify Cohort Analysis Important?
We’ve already covered some reasons as to why this analysis is important.
However, let’s walk you through some more reasons.
There are three stages for every customer in every business
You first make a sale to your customer.
After, if your customer likes your product, you then achieve the fulfilment stage.
Then, if they really love it, you hit the retention stage which then starts the cycle back to the sale.
Why am I showing you this?
It’s important to understand that your current customers actually generate you more money than new customers. Your current customers have already bought from you, there’s no obstacle to pass to get them to buy.
The sales process is way easier because they know you. They’re familiar with your product.
Here’s some interesting findings
- The cost of acquiring new customers can be between 5-25x more than the cost of retaining current customers (Harvard Business Review)
- Increasing retention costs by 5% saw a profit increase of 25%-95% (Bain and Company)
- Your top 10% of customers spend more than the other 90% (Harvard Business Review)
I hope you can see from the above that there is a pool of instant sales waiting to be tapped into.
The Cohort Analysis shows you who to target, but what do you do from there?
By the Numbers
Empower your business with our Shopify Data Driven App
- ✔ Know Your Audience Behavior
- ✔ Deep Customer Segmentation
- ✔ Retarget With Integrations
- ✔ All The KPIs & Reports You Need
How to Use this Analysis to Your Advantage
Here’s what you found out so far
- You know what a cohort analysis is and what it does.
- You know why it’s so important for shopify owners to understand.
Now I’m going to show you how to actually use this information and set you on the right path.
By the Numbers offers the best reports to analyze your customers and get exclusive data to scale your company.
Above you can see what the cohort analysis looks like. You can see that each group is grouped by the month they first bought from your store.
Here are some ways you can analyze them to optimize your store
Look at the Drop off points.
The best thing about this analysis is that you visually can identify when your customers tend to drop off and stop purchasing.
When you see this, you then can start exploring your store through different reports to see what’s happening.
Maybe you have a shipping issue? You can check out the Sales by Shipping Destination report to explore this
Maybe there’s a purchasing issue? Check out the Returning Customer Rate report. One reason for a low return rate can be customers not enjoying the checkout process. It just takes too long.
You can solve this by looking at ways to shorten your checkout process.
Look at your Onboarding Process
Want to hear something interesting?
66% of customers leave a brand if they feel unappreciated (Salesforce)
How are your customers treated when they first purchase from your store?
Are you sending some type of communication to them when they first purchase?
Customers need to feel valued. If you purchased an item from a store and got a personalized message, wouldn’t you look at that store more positively?
Your customers feel the same way.
Making your customers feel valued creates loyalty like no other. Sure, there may be other stores that sell products like yours, but they aren’t you.
Your customers simply won’t buy from someone who didn’t make them feel valued in the way you did.
The onboarding process is a very overlooked stage. Make sure your customers know they are appreciated. It can be as simple as a personalized email.
By the Numbers
Empower your business with our Shopify Data Driven App
- ✔ Know Your Audience Behavior
- ✔ Deep Customer Segmentation
- ✔ Retarget With Integrations
- ✔ All The KPIs & Reports You Need
