Ultimately, your time period should hinge on your product lifecycle. Some products, such as appliances or furniture, have lower purchase frequencies. Others, such as perishables or fashion brands have much shorter buyer frequencies.
Customer Retention Rate Method 2: Cohort Method
The cohort method to customer retention rate tracks customer behavior over time, segmented by when they became your customer.
The truth is, your business is not static. Every day, a change is made. Using cohort analysis, you are able to see if these changes made a positive impact on retention.
We put together an in-depth look at how eCommerce stores can use cohort analysis here.
Which Method Should You Use to Measure eCommerce Customer Retention Rate?
Using cohort analysis expands what you can do with customer retention rate.
While the first method gives you a general idea of how you are doing at retaining customers, it is not actionable.
Integrating cohort segments into your retention analysis gives you a much deeper understanding on where your eCommerce store is succeeding and where it is failing
Low retaining cohorts will pop out.
You will know where you need to improve. You’ll also discover areas where you are doing well, and possibly identify successful customer retention strategies to apply to other categories and product lines.
Creating a cohort analysis is a well documented process. You can find
How to Improve eCommerce Customer Retention Rate
Next, I want to break down how successful eCommerce stores increase customer retention rates. We start with Amazon.
How Amazon Increases Customer Retention Rate