What is Cohort Analysis?

Cohort analysis is a behavioral analytics tool that breaks down data into groups of people with common characteristics over time. In SaaS, this typically means grouping customers by their sign-up month to track their behavior.

For Startups: It helps answer critical questions like "Are customers from our new marketing channel churning faster than older cohorts?" or "Is our product getting stickier over time?".

For SaaS: Cohort analysis is essential for truly understanding churn and retention. It helps distinguish between a problem with the product (all cohorts churn at a high rate) and a problem with a specific acquisition channel (a recent cohort churns much faster).

Example: A chart showing the retention rate of the "January 2023" cohort of users over the subsequent 12 months is a cohort analysis.