In fact, it’s almost impossible to get a really good understanding of a service’s usage without looking at activity and retention numbers on a cohort-by-cohort basis.” “One of the most important tools to better understand the usage of a web application – or a service, a game or a mobile app, it doesn’t matter – is a cohort analysis. Cohort analyses also allow us to directly compare cohorts to each other - by lining up the starting date of each cohort. For example, typically in SaaS we would look at the progression of retention rate, plotting retention values for each month following the cohort’s creation. There are other ways to group cohorts for analysis (grouping by segment or size), but time-based cohorts are by far the most common approach in SaaS.Ī cohort analysis is a visual chart for plotting and comparing the progression of specific metrics for each cohort over time. That “Signed up June 2021” cohort will always remain, and you’ll track their journey as a user of your product. The reason for this grouping is that it gives us a good segmentation that can show us trends in behavior over time.
For example, your cohorts might look something like: We call this a time-based cohort analysis. In reality, when analyzing cohorts for a SaaS business you’re likely to be grouping by date of signup.
“A cohort is simply a fancy name for a group.”Ī cohort is, as Skok suggests, just a predefined grouping of your customers. Understanding user behavior over the course of a customer’s lifetime helps you optimize everything from plans and pricing to product features. A cohort analysis enables you to observe how a specific group of customers (a cohort) evolves over time. But when it comes to the tools and visualizations at your disposal for growing your SaaS business, cohorts are an essential piece of the puzzle. Before we get started, let’s address the elephant in the room: Cohort analyses aren’t exactly a SaaS metric.
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