Customer Retention Analytics in e-commerce: How to reduce churn with data

Customer Retention Analytics in e-commerce: How to reduce churn with data

Analytics has widespread application in e-commerce, including in retaining your customers. With analytics, you get insight into your customer behavior, including what retains and makes them churn.

Having access to holistic e-commerce analytics helps you develop and come up with strategies to retain your customers and increase their lifetime value.

Customer retention analytics also helps you increase your revenue. Studies show that when you carry out a marketing campaign, there is a 60 to 70% chance of selling to an old customer and a 5% to 20% chance of selling to a new customer, showing the importance of customer retention.

In this blog post, you will learn

1. Why customer retention analytics is essential for e-commerce businesses

2. The different types of customer retention analytics

3. How to increase customer retention with the MagicBean purchase retention app

Why Customer Retention Analytics is important in E-commerce

1. It provides quality insights into customer experience

Analytics allow you to see where your customer interactions are making customers churn. With that, you can see into the customer's experience and improve it as needed, thereby retaining your customers and increasing revenue.

2. It minimizes the cost of acquisition

Acquiring a new customer costs five times more than keeping an old one, and a 5% increase in customer retention can boost profit from 25% to 95%.

Rather than spend thousands of dollars on acquiring new customers to keep up with your revenue, it is way cheaper to retain an old one. Besides, you can easily upsell and cross-sell to your old customers without spending on acquisition.

3. It increases customer loyalty

Analytics allow you to see where your customers are at each stage of their buying journey and will enable you to imbibe hyper-personalization into your sales.

When you do, it brings about customer loyalty and trust. You can craft personalized messages for each group of customers.

For instance, when a customer buys from you, you can send a thank you message the following day and check in with them post-delivery.

You do not necessarily have to text each one of them manually. You can ask your analytics tool for the list of everyone who bought from your store the past week, import the list into your email platform, configure your thank you email body copy, and send it to everyone on the list.

MagicGPT is one of the apps in MagicBean’s suite of e-commerce analytical apps that allow you to carry out the above process in a few clicks.

4. It causes an increase in revenue

Analytics impacts revenue in a variety of ways. It gives valuable insights into which customers are about to churn, allowing you to create marketing strategies to retain them.

It will enable you to divide your customers into segments, allowing for hyper-personalized messaging and customer experience, leading to retention.

According to McKinsey, companies that use customer analytical tools see a 125% increase in revenue compared to those that don't.

Types of Customer Retention Analytics

There are three types of customer retention analytics, and in this section, we will briefly examine each one and their significance to e-commerce.

1. Descriptive Analytics:

This type provides a historical view of your customer behavior. By analyzing past trends, you can identify what has worked and what hasn't in retaining customers.

Significance: Understanding the reasons behind customer churn at specific life cycle stages enables you to take corrective actions, thereby improving retention rates.

2. Predictive Analytics:

This type focuses on forecasting future customer behavior based on past data.

Significance: It enables you to proactively address issues like potential customer churn by implementing targeted loyalty programs or personalized promotions.

3. Prescriptive Analytics:

This goes beyond describing or predicting outcomes by offering specific recommendations for ways to handle potential future scenarios.

Significance: For example, it helps in determining optimal pricing strategies for customer segments, thereby enhancing the likelihood of retention.

In summary, descriptive analytics helps you understand the past to improve the present, predictive analytics foresees future challenges in retention, and prescriptive analytics provides actionable recommendations to maximize customer loyalty.

How to increase your customer purchase retention with MagicBean

MagicBean is a suite of e-commerce analytical apps that allows you a holistic analytic view of your e-commerce business, thereby increasing revenue.

One of the apps is the MagicBean Purchase Retention app. This tool enables you to monitor your customer retention rates and provides insights segmented by first purchase date, first purchase category, and geographic location..

Here is a clearer view of what the MagicBean Purchase Retention app does and its significance to sales.

1. Track customer retention by first purchase date cohort

Keeping track of customer purchase retention in your e-commerce business is crucial for understanding your performance over time.

It shows you how many new customers you've gained in each cohort, and what percentage of them have continued to make purchases in subsequent time periods. The retention chart provides a comprehensive view of your customer retention rates.

You can set the cohort timeframe to be a week, month, quarter, or year.

2. Retention Rate by Category

Purchase retention takes it further by showing you the retention rate by the first category your customers have purchased. This allows you insight into which category has your customers' loyalty the most. This will enable you to allocate your marketing budget wisely.

Additionally, the MagicBean purchase retention app shows you the retention rate by brand and SKU (stock-keeping unit).

3. Retention Rate by Location

With the MagicBean purchase retention app, you can check your retention rate per state, city, and country. Which location has your most loyal customers, and which has the least?


Purchase retention is vital for every business, including e-commerce. It gives you a solid customer base; repeat customers contribute the most to your monthly revenue.

Besides, it helps you minimize customer acquisition costs, as the money you spend on getting repeat customers back is less than acquiring new ones.

MagicBean is a suite of e-commerce analytics apps that gives you a holistic view of your e-commerce store performance and customer behavior.

With apps ranging from RFM segmentation and MagicGPT to Purchase Retention, you have a suite of tools to meet all your analytics needs.