How Cohort Analysis Can Boost eCommerce Customer Retention Rates

If as an eCommerce store owner, you value your relationships with your customers, you’ll want to give them the best experience possible. This might mean that you add chatbots to your website in order to improve your customer support.

What it should also mean is that you dive into your analytics to find out how customers react to your site.

A core part of your analytics that you might have overlooked so far is cohort analysis. It sounds technical but it’s vital to learning more about your customers so that you shape your website and offers according to their need and wants.

What is a Cohort?

Let’s start with a basic definition of what a cohort is.

A cohort is a group of customers who share a characteristic.

For example, customers who shop online and customers who shop offline are two (very broad) cohorts.

Another cohort is a group of customers who signed up to your email list in the last month.

A cohort, however, doesn’t mean anything by itself. What you need to do is analyse your cohorts.

Cohort Analysis in a Nutshell

Cohort analysis could also be called behavioural analytics. It breaks down all of your customers – past and present – into groups in order to find patterns.

These patterns are key because they give you major insights into how your customers are reacting to different aspects of your business. Once you’ve got these insights, you can make the necessary tweaks to your website that could see a boost in conversions.

That’s the fundamental basics of cohort analysis. Let’s take a look at how you can use it to grow your ecommerce store:

Big spending customers

Many of us focus a lot on keeping loyal customers happy – but what about big spending customers?

Big spending customers are different to loyal customers. Although both are important, you need to segment the two because, while a loyal customer is obviously important, the amount they spend might not always be so high.

So while you want to keep your loyal customers happy, you’ll also want to keep your big spenders happy because there’s clearly to be money made from them.

Thus, you need to create a cohort of big spenders and then analyze their behaviour to work out what is driving their spending habits. Once you’ve identified your big spenders, you can then launch a campaign that ensures they stick with you.

For example, you might want to offer them early access to new products. Or maybe you could surprise them with gifts.

Whatever you do, make sure that you keep tracking this cohort to see what’s keeping them on your side.

The best thing about this cohort? It’s super easy to create because high spenders are easy to spot.

Cart abandoning customers 

A real problem for ecommerce store owners is cart abandonment. The stats for this one are scary – as many as 68% of your customers will abandon their cart. Why? Well, you’re not really going to know unless you delve into your cohort analytics. 

What cohort analytics can reveal are the reasons why people are abandoning their carts. Once you’ve got this information, you can do things that bring them back into the game while dramatically lowering that cart abandoned rate. Email reminders do work, but the reasons why customers abandon their carts are varied. They can range from costs of shopping to an inability to place an order. Or maybe estimated delivery time is what stops them in their tracks. 

Whatever it is, segment your cart abandon customers into a cohort and then work out a suitable action plan that brings them back to their cart. 

Landing page deserters

When you know that you’ve got the right product and the right traffic, it’s a bit of a puzzle when prospects arrive on your landing page … and quickly bail out.

There could be any number of reasons for this, from a slow loading website to other usability issues.

However, if you know that it’s none of these, the problem could be your logo, for example.

Blogger Matthew Woodward did some research into this and found that a logo can have such an effect on a site visitor that it can cause them to stick around or bail out. This is all down to branding and how a customer perceives you. If you can create a logo that resonates with your customers, you’ve got a far better chance of building relationships and trust.

Create 2 or 3 logos using a logo maker and test them out on your website to see how your customers react to them.

Loyal customers

Loyal customers are what we all want because they bring us that much needed steady revenue.

It’s a good idea to create this cohort because you can then target your loyal customers with rewards and special discounts that keep them coming back for more.

Plus, you can also learn the reasons why a customer becomes loyal so that you can then create a marketing campaign that’s designed to generate even more loyal customers.


All in all, cohort analysis is essential to the success of your eCommerce store. Remember that, as long as you can keep giving your customers what they want and need, it’ll be far easier to grow your store.

Ajay Sharma is a contributing editor at TechWebSpace. Ajay writes about organic and paid online marketing topics including PPC AdWords, and also writes about connecting the dots between digital media and real-world user behavior. He can be found on Twitter as @shandilyaajay.