I know you have a thousand things to do and cohort analysis on not top of the list, but you should incorporate it in your marketing activities and business performance reports because it is gold.
Cohort analysis gives you personalization at scale since it’s not 1-on-1, but it’s not blanket approach to your whole customer base either.
Cohort analysis in ecommerce means to monitor your customers’ behavior based on common traits they share – the first product they bought, when they became customers, etc. – to find patterns and tailor marketing activities for the group.
It’s not a must, but it helps a lot.
A CRM for ecommerce stores will have all the info on customer behavior that you need to understand buying habits and be able to serve them better.
For a proper cohort analysis – even if you do the segmenting and filtering yourself, you’ll need details like:
A good CRM will do the cohorts for you and map out their behavior over time so you can compare how different cohorts perform.
After you do cohort analysis, you’ll be able to do more and better retention because you’ll know what stimulates repeat buying in your store: what products, what promotions and what marketing initiatives attract loyal customers.
What products stimulate repeat orders -> more effective presentation of products
What offers work best -> better personalization
How often different cohorts shop – > build relationships with ongoing engagement between orders
How the customer journey goes -> more accurate timing of lifecycle marketing
When you do cohort analysis and understand the behavior of your customers over time, you can do more of what stimulates loyalty and retention, and drop what’s not doing it.
This will increase your customer retention rates overall because you’ll focus on the efforts that truly move the needle.
Cohort analysis works wonders for your email marketing.
It gives so much insights that you can completely re-organize the way you send customer retention emails.
When you know time between orders (TBO), average customer lifetime, how the orders are distributed over time, it’s easy to time your emails for the best possible moment when customers are ready to buy again.
You’ll know when they’re likely to run out of item X and gently offer a reorder. Or you’ll know they like to shop for shoes every 3 months so you won’t waste marketing budget on this cohort before.
Reminders are also right on spot: push if only people go over the average period between orders, not before. This prevents you from getting too pushy and alienating your customers.
Throughout the customer lifecycle, you can keep the relationship going with content and value-rich emails.
Content is a great way to say more about your products without getting on your customers’ nerves. Here are more ideas for content for ecommerce stores.
Such emails improve the customer experience because the communication is not just sales calls, but people can get something of value for free. They’re more likely to open your emails and generally feel more positive about your brand.
I know it’s hard to keep tabs on each and every customer, but you still want to tailor offers and personal attention.
You can do it after cohort analysis. The cohorts are smaller segments and they share something in common which makes personalization possible and meaningful.
Tailor your communication by what the products bought tell you about the customer and their needs, and offer only related products. The same goes for the promotions that brought them in – if someone converted from a “final sale -70% off” coupon, chances are they need equally deep discounts to continue shopping from you.
On the other hand, a cohort might consist of tens or hundreds of people (depending on your store and products) and that means 1 personalization effort for each cohort, not person.
Using customer segmentation for retention is the most logical thing to do: find the common thing among all those people and target them with the right offer for all of them. That’s why we say cohort analysis allows personalization at scale.
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