Preparing for hypergrowth this holiday season with cohort analysis - The Entrepreneurial Way with A.I.


Monday, November 9, 2020

Preparing for hypergrowth this holiday season with cohort analysis


The holiday shopping season is about to explode onto the ecommerce scene. With Deloitte expecting ecommerce holiday sales to grow to 35%, this will be the first peak season for many brands to start relying heavily on digital sales due to the effects of COVID-19.

If you’re one of them, you can get overwhelmed by the torrent of incoming data from pandemic-fueled opportunities. You’ll need quick answers to upscale. But breathe easy - ecommerce analytics, and cohort analysis in particular, can give you the insights to move fast.

Even if you’re already building reports to track sales and marketing conversions, it’s possible to dive deeper into your data. Cohort analysis does this by measuring buying behaviors among customer segments. Through the report, you can boost customer retention by intervening at the right time and hone your promotional strategies to maximize sales this holiday season.

Cohort analysis explained

A cohort is a group of customers with shared characteristics. It could be the first product people bought from you, the month they made their first order, the channel or ad they came to your online store from, or a coupon they activated.

By having this element in common, you can analyze this cohort and compare it with another cohort to learn the buying behavior. How people buy, how fast they convert, what makes them return to your store repeatedly, when they take particular actions, or which products work better than others at creating long-term loyalty.

How to read a cohort analysis

A cohort analysis report can be based on several customer-related metrics. They tend to divide down into two groups: behavioral cohorts that group people according to specific actions they take, like coming to your website through Google Ads. The second type is acquisition cohorts, based on when a user made their first purchase.

Your cohort chart will likely give you the date the cohort was created, the number of people in it, and the percentage who responded in a particular way.

Your cohort analysis report could be configured to display different factors, such as the number of people revisiting your store from a cohort, or the number of people in a cohort buying a particular product.

You can then compare different cohorts alongside each other for a specific time period. Cohort analysis visualizations can use bar or line charts, or, more commonly, show the data in columns and rows. And you can use color coding to indicate higher or lower numbers, so you can identify trends more easily.

Understanding your audience

You can gain a broad range of insights from your cohort analysis report. This enables you to tailor the customer experience and buying journey to increase profitability.

For example, by analyzing the first product ordered by customers, you can see that some products work much better at introducing buyers to your brand, which helps you to market more intelligently. You might realize there’s a particular product customers only buy once and don’t come back. This shows you which customers to pursue, to reduce churn and increase average order value.

Or you might gain insight on how fast you’re converting leads into customers, tracking the time between a customer’s first visit to their first purchase. This enables you to make improvements to the customer journey, or target offers more effectively along the funnel.

Staying ready

Lastly, cohort analysis can help you predict future behavior by getting ready to react quickly, knowing where your customer drop-off points are, or which products are bestselling at a particular point.

As a result, you can make specific products more visible on your homepage. Or you can send personalized email offers to nudge them. With clearer understanding of segment analysis, your inventory management will match anticipated demand to optimize profitability.

Intelligent ecommerce

This holiday season, e-tailers will compete fiercely to attract and retain customers. Ecommerce analytics plays an important role in empowering you to do this well and get the best insights from your data.

It’s also important to have a dashboard that integrates all your data into a single source of truth. This enables you to create powerful KPI indicators to chart your business health. Cohort analysis backed up by powerful data – that’s the key to a happy holiday season with great sales and satisfied customers. Learn how Adverity can support your eCommerce business growth.


, Khareem Sudlow