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How Retention Cohorts Unlock Powerful Insights for Shopify Store Growth

Discover how to use cohorts to analyze customer purchase behavior. Learn strategies to retain customers and drive long-term business growth.

Mar 20, 2025

Why Tracking Retention is a Challenge for Ecommerce Stores

Retention rate is a crucial metric for eCommerce businesses—it tells you how long customers stay engaged with your store. However, tracking retention consistently and deriving actionable insights has always been a challenge for Shopify merchants.

The biggest hurdle? Fragmented data across multiple platforms. Since customer interactions happen across Shopify, Google Analytics, and marketing tools, collecting and analyzing this data in one place is a monumental task.

Even if you consolidate this data in a spreadsheet, making sense of it requires extensive Excel skills and long hours of manual calculations.

The best solution? Retention cohort analysis.

What Are Retention Cohorts?

Retention cohorts help businesses track customer retention patterns by grouping customers based on shared behaviors (e.g., purchase date, campaign source, or product category). These groups are then analyzed over time to see how long customers continue purchasing.

This method effectively provides a clearer understanding of retention trends and helps uncover actionable insights to improve customer retention strategies.

Why Cohort Analysis is the Best Way to Track Retention

Traditional customer tracking methods—such as RFM segmentation—offer insights, but cohort analysis provides a deeper level of behavioral tracking.

What is a Cohort?

A cohort is a group of customers who share a common trait—such as making their first purchase in the same month.

What is Cohort Analysis?

Cohort analysis studies how these customer groups behave over time, providing insights into:

Repeat purchase trends
Retention rates over months or years
The impact of marketing campaigns on customer loyalty

By tracking cohorts, you can analyze which customers are sticking around and which are dropping off—allowing you to refine your marketing and retention strategies.

How to Analyze Retention Rate Using Cohort Analysis

Retention cohort data can be analyzed horizontally and diagonally to extract meaningful insights.

Horizontal Analysis (Month-over-Month Retention)

Looking at retention horizontally helps you track how many customers continue purchasing each month after their first order.

For example:

Month 0: January cohort (first purchase) = 35 customers
Month 1: 30 of these customers return
Month 2: 25 of them remain
Month 9: 18 customers are still purchasing

By following this pattern across months, you can see how customer retention declines over time and pinpoint where engagement strategies are needed.

Diagonal Analysis (Total Customers in a Given Month)

Looking at retention diagonally helps calculate the total number of customers who made purchases in any given month—including both new and returning customers.

For example:

January: 35 customers made a first-time purchase.
February: 18 new customers + 35 retained customers = 53 total customers.
March: 22 new customers + 18 retained from February + 30 retained from January = 70 total customers.

This view helps businesses spot retention trends across different months and evaluate the impact of marketing campaigns on returning customers.

How to Calculate Retention Rate from Cohorts

Retention rate is calculated using this formula: Retention Rate=(Number of Retained Customers/Total CustomersAcquired)×100Retention Rate = (Number of Retained Customers / Total Customers Acquired) × 100

For example, if you originally acquired 35 customers in January, and by Month 4, 25 of them are still purchasing, your retention rate is: (25/35)×100=71(25 / 35) × 100 = 71%

By tracking this across different cohorts, you can analyze which groups have the highest retention rates and what factors contribute to customer churn.

Optimizing Your Ecommerce Retention Rate with Cohort Insights

Once you’ve analyzed your retention cohorts, it’s time to take action. Here’s how:

1. Strengthen Post-Purchase Engagement

Send personalized thank-you emails after a customer’s first purchase.
Offer special incentives for second purchases (e.g., discount codes, loyalty points).

2. Improve Customer Support & Experience

Offer fast, seamless returns.
Provide exceptional customer service that builds trust and keeps customers coming back.

3. Implement Subscription & Loyalty Programs

Reward repeat buyers with exclusive discounts and VIP perks.
Introduce subscription-based services to encourage long-term engagement.

4. Use Data-Driven Retention Strategies

Analyze retention cohorts to identify at-risk customers.
Use automation tools to send re-engagement emails to customers who haven’t purchased in a while.

Best Tools for Cohort-Based Retention Analysis

1. Shopify Analytics

Offers basic retention tracking but lacks detailed cohort segmentation.

2. Bloom Analytics

Best for deep cohort analysis, providing granular retention insights across multiple customer segments.

3. Peel Analytics

Automates retention and churn analysis in real-time.

4. Lifetimely

Predicts long-term customer retention trends.

5. Polar Analytics

Offers multi-channel retention tracking and customer segmentation.

Final Thoughts: Why Cohort Analysis is Essential for Shopify Stores

Retention cohorts provide clear, actionable insights that help businesses improve retention, reduce churn, and optimize marketing strategies.

Track how different customer groups behave over time.
Measure retention trends across months to spot drop-off points.
Use retention insights to personalize marketing efforts and boost repeat purchases.

By leveraging automated retention tracking tools like Bloom Analytics, Shopify merchants can streamline their retention strategy and drive long-term growth.

Try Bloom Analytics for Advanced Retention Tracking

Manually tracking retention data is time-consuming. Bloom Analytics automates retention cohort analysis, providing real-time insights that help you:

Identify high-retention customer segments.
Optimize retention campaigns based on real data.
Refine your marketing efforts to maximize customer lifetime value.

Sign up for a free trial today and take control of your customer retention strategy!

Unmatched Expertise and Proven Results

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