Cohort Analysis enables you to compare how different group of customers behave over time efficiently. It is identical to user segmentation; however, there is a clear line of difference between the two. Cohort Analysis allows us to know how different cohorts behave over time and more interestingly, how the same behavior differs for different cohorts.
Calculating the average cumulative customer spending based on the date of first purchase
In the chart above, the average customer in newer cohorts is spending less as time goes on. This would be a red flag for many investors or acquirers because it implies that the value of recently-acquired customers is less than those acquired in the past.
Calculating the spending of our customers by grouping them by how they were originally referred to our business.
There are hundreds of cohorts marketers can create. But, the question here is not how many they can create. It’s which cohorts will produce the most insightful data.
When thinking about which cohorts to track, ask yourself these questions:
By now, you must have clearly understood the meaning of cohort analysis and how we can use it for our business and its marketing. So, if you haven’t performed cohort analysis for your business yet, connect with Infocrest and our team of analysts, will help you build one.