What is Cohort Analysis?
Definition
A technique that groups subscribers by their sign-up date to analyze retention, behavior, and revenue patterns over time.
Understanding Cohort Analysis
Cohort analysis is essential for understanding subscription business health. By grouping users who signed up in the same time period (cohort), businesses can compare how different groups behave. For example, a January cohort might retain better than a March cohort, revealing seasonal patterns or the impact of onboarding changes.
Key metrics tracked by cohort include retention rate, LTV, and expansion revenue. For consumers, cohort analysis explains why services offer different promotions at different times — they're testing what produces the best long-term subscribers.
Related Terms
Retention Rate
The percentage of subscribers who continue their subscription over a given period, calculated as the inverse of churn rate.
Churn Rate
The percentage of subscribers who cancel their subscription during a given time period, typically measured monthly or annually.
Lifetime Value
The total revenue a business expects to earn from a single customer account over the entire duration of their subscription relationship.