Fundamentals of Business Intelligence (FBI) Practice Exam 2025 - Free Business Intelligence Practice Questions and Study Guide

Cohort analysis is an effective method for tracking customer retention over time because it groups customers into segments based on shared characteristics or experiences within a certain timeframe. By examining these cohorts, businesses can analyze how retention rates change across different groups and periods. This allows for insights into behaviors and patterns that impact customer loyalty, such as the effectiveness of marketing campaigns, product changes, or shifts in market conditions.

Using cohort analysis, businesses can identify trends, measure the impact of retention strategies, and optimize efforts to improve customer loyalty. For instance, companies can observe how long-lasting relationships develop among customers who joined in a specific month and compare this to those who joined in a later month.

While the other methods mentioned—real-time analytics, data storytelling, and predictive analytics—offer valuable insights in different contexts, they do not specifically focus on the historical tracking of customer retention in the same structured manner that cohort analysis does.