Glossary / Cohort Analysis

Cohort Analysis

Cohort analysis is a technique used in business and marketing to analyze the behavior and characteristics of a specific group of customers over a period of time. It involves dividing customers into groups based on a common characteristic or event, such as the month they made their first purchase or the marketing campaign they were exposed to. The purpose of cohort analysis is to understand how different cohorts of customers behave and how their behavior changes over time. By tracking key metrics such as customer retention, average purchase value, and customer lifetime value, businesses can gain insights into the effectiveness of their marketing strategies, customer segmentation, and overall customer satisfaction. Cohort analysis can be used to answer various business questions, such as: 1. How do different cohorts of customers differ in terms of their purchasing behavior? 2. How does customer retention vary across different cohorts? 3. How does the average purchase value change over time for different cohorts? 4. How does the customer lifetime value differ between cohorts? 5. How effective are different marketing campaigns in acquiring and retaining customers? By analyzing these questions, businesses can identify trends, patterns, and opportunities for improvement in their customer acquisition and retention strategies. This analysis can help businesses make data-driven decisions and optimize their marketing efforts to maximize customer lifetime value and overall business growth.