Understanding Google Analytics' Cohort Analysis User Retention

If you are planning to start an online business or already running an online business. Chances are you want to know more about about your website visitor behaviour and what you can do to retain them with the goal of increasing profits.

Google Analytics have an array of useful reports that allow you (the web master) to peek into your visitor behaviour. These reports help you to make better decisions by drawing conclusions from insights gained through analysis of the visitor data.

One of the latest addition into the Google Analytics report is the Cohort Analysis.

Cohort analysis definition in

Technical term - means to conduct a study on a group or segment that showed distinguishable pattern, behaviour or experiences with an object(business, website,etc) within a given time.

Or

Normal English – to know what a group of people are doing with an object(business, website, etc) within a given time frame.

An example of cohort analysis - you are trying to measure the how much money a group of drinkers spend on a particular brand of beer over the period of 2 years since they first try the brand.

To get cohort analysis right from the beginning. You need to ask the right question. Without asking the right question, there's no way you can get the right answer that you seek to get from performing cohort analysis.

One of the most useful cohort analysis metric is the study of user retention rate. That is asking the question in order to know the number of users in the cohort that returned in the given time period.

Fortunately, Google Analytics Cohort Analysis has the predefined metric that allow you to get the user retention data.

In the report, click on Metric drop down button and scroll down to Retention->User Retention. Next, select Cohort Size and choose by week.

From the help information, User Retention is defined as :

“The number of users in the cohort who returned in the Nth time period (day, week, month) divided by the total number of users in the cohort.”

An example cohort analysis user retention report :

From the report, in the September 20th to September 26th row. We can see that about 10.08 % of the visitors returned back to the website the next week and then gradually becoming less and less after several weeks. As this report is for web site(blog) owner, this report provides an insight of how many percentage of the first time visitors coming back again over the weeks.

Since the data above is purely for a blog, there's not much insights to be gained. The way to increase user retention is to increase the number of content relevant to the visitor search pattern.

However, for e-commerce sites, user retention report is used to understand visitor behavior and can be helpful in studying subscription or purchasing patterns over time.

For example, let say the month of October consistently showing significant drop of user retention over the period of 2 years. The drop shown in the report will help the e-commerce marketers to gain actionable insights. One of the actionable items that the e-commerce operator can do (ain't all businesses want customers loyalty?) is to launch aggressive re-marketing campaign to target the previous visitors to come back and shop again. If the re-marketing campaign work well, it will help to increase profits :-)

Summary :

Google Analytics' cohort analysis tool is still at beta stage and still need a lot of work. However, it shouldn't stop you from using it as a kinda of crystal ball to gaze into how your website visitors behave according to certain attributes over time.