What is Cohort Analysis?
Cohort analysis allows a company to derive more value from their data by analyzing groups of people who share common and specifically selected characteristics. This analysis allows companies to gain specific insight(s) into audience behavior(s). These insights help understand trends, patterns, and potential outcomes to enable positive changes within those groups — or to mitigate negative actions.
Types of Cohorts
Two types of cohorts that can be typically analyzed when applied to customers: demographic-based or behavior-based.
Cohort analysis by demographics provides insight into groups of people who share common characteristics, such as age, gender, income, education, or geographic location.
Cohort analysis by behavior provides insight into groups of people who share particular behaviors, such as purchasing a specific product, doing a particular activity, or responding in a specific way.
How To Use Cohort Analysis
Cohort analysis tools can help a business better understand customers or users and inform decisions about what products and services to offer — or not offer. Cohort analysis can produce insights about the perceived value of their brand among different client groups, inform strategic marketing initiatives, or demonstrate the effects of seasonality. Cohort analysis can also answer questions such as:
- How have product or service changes affected specific customer groups?
- Which variables contribute to audience behavior change(s) over time?
- Which characteristics do our most engaged customers have, relative to a particular product or service?
- Which variables contribute to new users or customers to disengage?
- What are the common behaviors of the most engaged users or customers?
Cohort Analysis Example
Cohort analysis tools can help you uncover insights about specific groups of your customers. For example, you could group customers by geographic region and identify the products they purchased over time. Further dividing this cohort into new customers and repeat customers could also provide insight into the differences in purchasing behaviors or better understand potential customer lifetime value for their region.
Watch this demo to learn about how you can use Looker to build queries for cohort analysis.