Cohort Analysis: Measuring User Acquisition optimization and improving customer lifetime retention percentage.
Cohort analysis is one of the behavior analysis techniques involving data generated by users/customers of a digital service, such as websites, e-commerce platforms, or other mobile applications. This analysis technique will carry out an analysis of data on user/customer behavior patterns that are grouped into specific parameters with a predetermined timeframe to produce a pattern.
This pattern will later be used as a benchmark that can help service providers find out whether the policies, they are implementing have been effective in increasing user engagement over time or have only seen user growth but no significant involvement for service providers.
This cohort analysis is very helpful for service providers because it can provide different insights into measuring the effectiveness of the user acquisition process in service with service user engagement metrics. This is because user/customer growth metrics usually overshadow the results of user/customer engagement metrics in business growth.
There are two types of cohort analysis that commonly use in the business, behavior cohort analysis and acquisition cohort analysis.
We can implement not only each type of cohort separately but also both cohort types. First, the Acquisition cohort can be implemented by the companies when they need information when the group of customers starts to use their products and services. By using this type of cohort, the companies can track the information daily, weekly, monthly, or yearly, and the last is a behavioral cohort. This cohort type can be used to identify specific information from the customers by their digital behavior activities over time.
For example how many users or customers do registration, why they cancel their registration, how many times they click on each menu, which feature is mostly used by customers, etc. There are some benefits of using cohort analysis for business growth metrics:
- Making data-driven decisions and solving problems in business;
- Helping to measure KPI’s success metrics performance indicator for acquisition campaign;
- Gaining deeper insights into users’ or customers’ engagement with digital apps from time to time;
- Helping to tailor products or services based on customer’s personal behavior;
- Analyzing advertisement performance impact during marketing campaign;
- Improving user/customer lifetime retention;
- Re-engaging high-quality customers/users, and many more.
As a versatile tool, cohort analysis can be helpful to implement in various industries, I will give some examples of how can cohort implemented to support business decision-making:
- E-commerce
E-commerce companies need comprehensive information on their customer’s behavior over time to understand how many different groups they have for helping them to tailor their marketing campaign to specific cohorts. - Mobile apps
Mobile apps need to understand the growth of the apps installed by the customers and how many of them are actively engaged with the apps. This is the reason why cohort analysis is an effective technique for mobile apps provider to gain deeper insights into users in specific groups’ engagement with an app over time, and even refine KPIs when measuring campaign performance indicators for the marketing team. - Gaming
Gaming companies need deeper information on how different groups of players behave over time to understand and look in-depth at their group of players to tailor their marketing strategy to specific cohorts. In conclusion, cohort analysis is a powerful technique to help businesses understand their customer by measuring some information of customers’ data from their digital activities to increase user engagement and effectiveness of the user acquisition process.
In conclusion, Cohort analysis is a versatile tool that can provide valuable insights for businesses seeking to optimize user acquisition and improve customer retention. By understanding user behavior, implementing effective strategies, and measuring key metrics, businesses can make informed decisions to drive growth and enhance customer loyalty. Start leveraging the power of cohort analysis to unlock the full potential of your business.
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