Customer cohorts. How to get the most out of your metrics

“Cohort analysis enables you to observe how a specific group of customers evolves over time.“ - Ed Shelley.

Just compare, which message is more valuable:

1. Customer churn rate is up by 2%
2. Most customers churn in month 3 of the customer lifetime.

To create cohorts, separate your customers into meaningful groups. This could be for example subscription date, region or pricing plan. Afterwards track your metrics and compare the progression of your metrics for each cohort over time. This could be the percentage of customers churned relative to previous month.

Ed Shelley created a great article about cohorts: SaaS Metrics Refresher #6: Cohort Analysis.

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