Behavioral Cohorts – Get An Insider Look at Your Customer Behavior

Posted By: editor
Posted On: 22 Apr, 2021

In today’s digital landscape, e-retailers can no longer afford to follow one size fits all approach while analyzing the customer purchase behavior. Each customer shops slightly differently from the other, and some customer group’s behavior can be significantly distinct from rest.

Cohort analysis is one of the best ways to capture specific patterns of customer behavior as it breaks down customers into groups instead of looking at them as a whole.

The previous article on cohort analysis talked about acquisition cohorts and highlighted their uses in the e-commerce industry. Acquisition cohorts are ideal for identifying trends and pinpointing where customers churn. However, they will not provide insights into why customers are leaving. That is where the behavioral cohorts come in.

Behavioral cohorts facilitate a deeper understanding of the customers and how they interact with the products. One can use this information to discover the actions driving retention and focus on facilitating them.

Here we discuss the primary use cases of behavioral cohorts in the e-commerce industry.

Gain insights into specific customer behavior:

One of the most important value propositions of doing cohort analysis for marketers is that it allows them to ask specific questions related to customer behavior and analyze only the relevant data. This makes the insights actionable, allowing marketers to adapt to customer needs and communicate effectively.

For instance, one can analyze customers who viewed a product and then purchased it within an ideal period. This will help them get an idea of how long it takes a customer to decide and make a purchase.

From the above table, one can decipher that most of the customers make a purchase 2-3 days after evaluating the product. The next step would be to understand why the customers take 2-3 days to make the purchase and reduce the time gap.

Find the sticky activities/ features:

We have seen that acquisition cohorts help in identifying the major drop-off points. Now, one can use behavioral cohorts to understand the behaviors that caused the churn. They can also use it to identify activities performed/ features used by the retained customers.

For instance, e-commerce stores offering staples can identify the popular products purchased by most of their active customers and send prompts to inactive customers on these products. The store can get a deeper understanding by looking into the days of the month where most of the orders are placed and space the messages accordingly.

Similarly, one can check if certain activities (like being part of a membership program, using a specific payment method) results in a higher likelihood for retention and promote them extensively.

Predict future behavior and get ready to act:

While cohort analysis is a long-term and ongoing activity, one can use some cohorts as templates for projections. Their behavior can guide what to expect from the similar cohort that comes in at the same time next year.

For instance, holiday shoppers/ clearance shoppers are mostly onetime shoppers. They are usually outside of the core target group and efforts. One can plan upcoming holiday/ clearance promotions taking past data of such cohorts into account.

Expect customer’s reaction to new product/ feature release:

One can use cohort analysis to study the adoption rate of new product/feature releases. This information can help them in deciding whether to continue or make improvements.

For instance, an e-commerce store launching a new product can study different cohorts’ reaction to various stages of new product launch (pre-launch, launch, post-launch) to identify the specific cohort which is more inclined towards the product. Thereafter, they can customize different products as per cohort suitability.

Conclusion:

Most of the time, user groups can be differentiated through their unique perception or action, which can be used to the businesses’ advantage when correctly tracked. Behavioral cohorts help in identifying both positive and negative behavior patterns in advance, enabling businesses to take the right action.

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