Cohort Analysis
Grouping customers by when they were acquired and tracking each group over time, instead of trusting a single blended average.
Definition
Cohort analysis segments customers by a shared starting point, usually acquisition month or quarter, then measures retention, revenue, and churn for each group across its lifetime. It exposes trends that company-wide averages hide, such as a recent cohort churning faster than older ones. It is the most reliable basis for LTV, retention, and payback calculations.
Why it matters
Company-wide averages lie. A blended retention number can look stable while every new cohort quietly degrades. Cohort analysis is how you catch a deteriorating funnel before it shows up in the aggregate, which is usually two or three quarters too late to fix cheaply.
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