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4 Benefits of Customer Retention Analysis for Your Shopify Store

Jaques Cilliers - Writer for BeProfit
By Jaques Cilliers
Head and shoulders photo of Michelle Meyer
Edited by Michelle Meyer

Updated May 5, 2023.

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Customer retention is essential for the success of any Shopify store as it helps you increase your sales, customer referrals, and customer lifetime value. Essentially, you create a loyal customer base and build long-term relationships. In turn, you understand their needs better and provide them with tailored services and products.

After managing various Shopify stores, I discovered that a cohort analysis is a good place to start analyzing customer retention, because it gives me valuable insight into customer behavior. I find areas where I can improve and try out new ways to keep customers coming back. This helps to drive the direction and strategy of my business.

What is a Customer Retention Analysis?

Customer retention analysis is a method of tracking customer engagement and loyalty over time by grouping customers based on when they first made a purchase. 

It sure is an eye-opener to discover how certain types of customers, according to their demographics and interests, would interact with my store. It even helps me identify the best times to run promotions and other campaigns to increase customer retention.

I rely on the data in Shopify's analytics and advanced reports to conduct my customer retention analysis. Once my customers are grouped based on their purchasing history, I can track customer engagement and loyalty over time (data from the customer cohort analysis report is particularly useful). 

» Follow these steps to conduct a Shopify cohort analysis

1. Easily Identify When Your Customers Churn

As a starting point, I use these metrics to find out when my customers churn (i.e., where do I lose customers along the way):

  • Repeat purchase rate This measures the percentage of customers who make a second purchase after their first one. If this metric goes down, it means customers were unhappy with their first purchase and aren't likely to come back.
  • Customer lifetime value This is the total amount of revenue that a customer is expected to generate for your store over their lifetime. If this number goes down, it means customers aren't coming back as often or aren't spending as much.
  • Abandoned cart rate This measures the percentage of customers who add items to their cart but don't complete the purchase. If this number goes up, it means customers are losing interest in your products or having trouble with the checkout process.

You can use third-party apps to track customer behavior and engagement with your store. For example, I faced a situation where the abandoned cart rate increased. So, I installed an abandoned cart recovery app and followed it up with an automated email that I triggered a day later offering a 10% discount. The abandoned cart rate decreased as a result.

2. Understand Why Your Customers Churn

Once you know where you're losing your customers, you can investigate why. I like to gather and analyze data from many different sources to get a full picture of the problem and test any theories.

  • Analyze customer data Look at customer data such as purchase history, demographics, and behavior on your website to identify patterns or trends.
  • Test the checkout and customer service processes Test your checkout and customer service processes to ensure they're fast and user-friendly. Consider running A/B tests to test different processes.
  • Conduct surveys or interviews Reach out to customers who have left the store and ask for feedback on why they decided to stop shopping.

» Improve your customer retention strategy with email marketing

3. Manage Your Marketing Budget More Effectively

Doing a customer retention analysis also helps me save marketing costs. Why? Because ROAS and customer retention and directly related and, more importantly, it's usually cheaper to keep customers you already have than to get new ones. A study I recently read by Invesp showed that acquiring a new customer can be as much as 5 to 25 times more expensive than retaining an existing customer.

So, by focusing on retaining my customers, I further reduce my marketing costs because I'm creating targeted ad campaigns with a higher likelihood of conversion. According to, repeat customers spend on average 67% more than new customers. As an extra, I've also found that my repeat customers are more likely to refer their friends and family to the store—reducing costs further and boosting revenue.

» Learn about customer acquisition cost in e-commerce and how to find yours

4. Boost Your Revenue and Business Growth

Repeat customers help boost revenue and business growth through two main factors: reduced price sensitivity and being more open to new products and services.

  • Pricing By engaging with my customers and building a community, my repeat customers trust my brand. This makes upselling and cross-selling easier and increases my average order value (AOV).
  • New products or services Because of trust in my brand, repeat customers are more open to trying new products or services. This keeps them engaged and simultaneously helps to attract new customers because it shows my business is relevant and competitive.

For example, I added a new product and ran a marketing campaign for 2 weeks where I offered my existing subscribers an additional discount for ordering the new item. It worked like a charm and boosted my revenue by 20% for that month.

» Follow these extra tips to boost Shopify sales

Solidify Your Customer Base With BeProfit

I cannot overstate the importance of customer retention analysis. Retaining your customers and building a solid customer base are key to a successful Shopify store. When you take full advantage of the data that your Shopify store gives you, you can experience the benefits I've discussed.

To simplify your analysis and improve customer retention rates, invest in BeProfit's solution and make data-driven decisions while viewing all your metrics at a glance.

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