Cohort Analysis For E-Commerce

In today's digitized world, ecommerce businesses are gaining a continuous momentum. Especially after the pandemic has happened, more and more businesses are opening online stores, and already established brands are building their e-stores for the first time to reach a larger customer base, to grow, and to increase their revenue. This means that the competition in this field is also on the rise. Businesses are looking for different tools and techniques to give them an advantage over their competitors.

One of these techniques is to put the data they have into use in order to understand their customers' buying habits and behavioral patterns. Cohort Analysis is what helps them do just that

What is Cohort Analysis?

In ecommerce terms, a "cohort" is a group of individuals who share a particular characteristic, usually a particular action they've all did within a specific period of time.

Cohort Analysis refers to the practice of studying and analyzing the activities, habits, and behaviors of a particular cohort in a defined time frame.

For some people, cohort analysis may be very similar to customer segmentation. While this may be somewhat true, cohort analysis differs from customer segmentation as it focuses more on the historical data of the customers. Cohort analysis uses historical data to spot patterns throughout their buying journey.

Importance of Cohort Analysis:

Cohort Analysis is becoming more common among merchants with e-stores to understand the behaviors of their customers and to strengthen and grow their businesses.

Generally, cohort analysis helps understanding the different patterns of behaviors of your consumer base. You can use it to compare the data of people who came in contact with your store at the different times so that you can measure the efficiency of your improvements and your marketing.

It is used by B2C brands to keep an eye on the different ways people are engaging with their online store even during pre-purchase stage.

Cohort analysis helps businesses see insights and get answers to questions such as:

  1. where do customers drop off most often?
  2. Why are people abandoning their carts?

It is very important in case of wanting to create a high-conversion sales funnel and to strengthen the relationship you have with your customers, right from the discovery stage.

Benefits you can have when conducting a Cohort Analysis:
  • Building a data-driven sales funnel
  • Creating data-driven marketing strategies
  • Mapping customers behaviors overtime and use the data to predict their behavior and engagement in the future
  • Spotting of there are certain products you can add to your store so that you can add value to your customers and increase your revenue

Use Cohort analysis to uncover patterns in your customers' behavior

The competition in the field of e-commerce is increasing daily; retailers are working tirelessly on getting their business online. Those who are going to succeed are those who can find an advantage over the other competitors.

Data analysis in general and cohort analysis in particular gives retailers the insights they need that can give them this advantage they're looking for. Use Cohort analysis helps you understand the behavior of your client base so that you are able to improve your marketing and choose the messaging that can resonate with them.

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