What is Cohort Analysis?
A cohort represents a group of a population or an area of study that shares something in common within a specified period.
For example, a group of people born in India in 2000 is an example of a cohort related to the number of births in a country.
Likewise, in terms of business problems, cohorts represent a group of customers or users. For example,
Several users who purchased the app's subscription during a specific time period The number of users who cancelled a subscription during the same month.
Without having to examine each user's behaviour individually, cohort analyses make it simple to study user trends and behaviour.
How Come Cohort Analysis? The specificity of the information provided by the cohort analysis makes it crucial for the development of a firm. The most advantageous aspect of cohort analysis is that it aids businesses in addressing specific issues by analysing pertinent data. Cohort analysis has a number of benefits for businesses, including:
Understanding how user behaviour may impact customer acquisition and retention is beneficial. Analyzing the client churn rate is beneficial. Additionally, it aids in determining a customer's lifetime worth. It assists in identifying the areas where we need to improve consumer involvement.
Types of Cohorts There are three types of Cohort Analysis:
Time Cohort Behaviour Cohort Size Cohort
Customers that signed up for a product or service during a specific time frame are known as time cohorts. Based on when they began utilising the company's goods or services, analysis of these cohorts reveals customer behaviour. The interval can be daily, weekly, monthly, or quarterly.
Behaviour Cohort
Customers that have previously made a purchase or subscribed to a service are known as behaviour cohorts. Customers are categorised based on the kind of product or service they have subscribed to. Customers who enrolled in basic services can have different needs from those who enrolled in advanced services. A company can provide services or products that are specially tailored for certain segments by having a thorough understanding of the needs of various cohorts.
Size Cohort
Size cohorts are the various client sizes that use the business's goods or services. This classification may be based on the amount spent within a specific time frame following the purchase or the category of product on which the customer has spent the majority of their order funds during that time frame.