All You Need To Know About Customer Cohort Analysis

Practicing business analysis

Having a great business plan isn’t sufficient to build a lucrativestartup. Practicing business analysis on a long-term basis is also important. One such business analysis is Customer Cohort Analysis. The term might sound very troublesome. But this is the simplest analysis you can ever implement.

In diction, the meaning of cohort is a group of people who perform a specific task in a common time frame. This was basically a tactic used by Romans in 107 BC.

So collectively, Customer Cohort Analysis is a business analytics tool used to track the customer retention and behavior over a period of time. In this analysis, the relevant customers are placed in a group known as cohort. This was basically done by App startups to track the user experience and behavior of App users. But now, this tool is generalized to all niche startups for taking a deeper insight into the product-customer relationship.

Why Do Customer Cohort Analysis?

While practicing business analysis, including Consumer Cohort Analysis can prove beneficial to the startup growth. When you are trying to drive audience/ customer to your service/product, you must make sure that you are investing in the right direction. Right direction means the right kind of audience or placing the right kind of product for a particular audience.

How do consumers interact with your product/ service? Do they follow up and drop out suddenly? Are they retained for a longer period? Is the customer retention and behavior positive or negative? These all questions can be answered through Customer Cohort Analysis.

And further, Root Cause Analysis can be done to know the background of the observed patterns.

How to do Customer Cohort Analysis?

  • Decide The Purpose Of Your Analysis

Before you perform the analysis, you must decide the purpose of it. Whether you need it to improve your business, sales, product or user experience.

The metrics used for the analysis widely differ according to the purpose of analysis. The purposes can be of following types:

  • To track consistency, growth, or deterioration.
  • Study retention, engagement, and acquisition.
  • To measure the effectiveness of Marketing Practices.
  • Track monthly revenue and customer LTV (Lifetime Value)
  • Set The Metrics For The Direction

Metrics is the data that will be visible in the report. In Google analytics the default metrics is retention. Other metrics are subscription start date and customer’s monthly payment.

  • Make Cohorts According To The Condition Of Relevance

The cohorts are formed by considering common traits. Traits such as the date of buying the product or subscribing the service.

  • Collect the data in Excel format

This data is collected in a data visualization manner to examine our purpose. The data collected can be studied over time to draw conclusions about customer retention and behavior.

“ Customer Cohort Analysis may sound complex but the tools offered on Google Analytics is the antidote to all the complexities. It’s user friendly, traceable, and easy to understand.”

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1 thought on “All You Need To Know About Customer Cohort Analysis”

  1. All articles of Kiran Patil are very nice. You are really doing well..
    Your writing skills are also good.. Best of luck!!

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