Cohort
Definition
Customer cohorts are a group of customers who share common characteristics, such as age, location, or purchase history. They are often used to determine the most effective methods for reaching out to similar customers by grouping current customers into cohorts for analysis.
In the SaaS industry a common cohort is based on the length of time that certain customers have been with you.
Example:
2021 Cohort: Customers who signed up in 2021
Year 4 Cohort: Customers who are in their fourth contracted year with you
Q1 2022 Cohort: Customers who signed up in the first quarter of 2022
These cohorts can be used to compare purchase trends but also to compare SaaS specific metrics such as churn rate.
Why should I care about customer cohorts?
The more you know about your customers, the more effective your marketing strategies will be. Segmenting customers into cohorts allows you to tailor messages and offers in order to appeal to each group's particular needs. It also helps you identify opportunities for cross-selling and upselling existing customers, which can help you increase revenue and profit margins.
What are some examples of customer cohorts?
Here are just a few examples:
Gender: Men vs Women
Age/Generation: Baby Boomers vs Gen Zers vs Millennials vs Gen Xers
Location: City dwellers vs suburbanites vs rural residents
