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What is Cohort Analysis? – Google Analytics, Categories, and More

What is Cohort Analysis?

Cohort analysis is a type of report, which divides customers according to a particular criterion and shows the buying behavior of the group over time: how often do they buy, how much do they spend, how long do customers stay, etc.

Therefore, time is a critical factor in developing a good cohort analysis. Where can you do a good cohort analysis? In Google Analytics!

Cohort Analysis in Google Analytics

Google Analytics is and will be your support tool to develop online marketing study and analysis tasks. Once again, it offers us an exciting and valuable feature: A cohort analysis. How to access it?

  • Sign in to Google Analytics.
  • Open the Audience tab.
  • Select Cohort Analysis.

Now, in front of you, you have a powerful tool with a great configuration capacity that makes it possible to know the analysis of cohorts of a very different nature.

Categories of Cohort Analysis

Thus, we find the following main categories:

Cohort Type: Concept related to the size of the cohorts. Unfortunately, in Google Analytics, there is only one type of Cohort: Acquisition Date.

Cohort Size: Size is related to the value type of the cohort dimension. For example, with the Acquisition Date, week, day, or month can be selected.

Metrics: Refers to the metrics to apply to determine the analysis: user, retention, or total level.

Period: It is the time interval to be analyzed in the report by the cohorts.

Finally, there is the configuration of the graphs where the created cohorts are selected and verified. And also, to make other types of mates, it is possible to use Custom Segments or Google Analytics API.

Which Cohorts are Most Important to Analyze?

Of the different cohorts that we can study their behavior, the following stand out as really important to boost recurring sales:

For the first Product purchased: The first item the customer buys determines all future interactions with your brand.

For the first month of the first conversion: Offers a temporary idea about user behavior.

And also, By Traffic Source: Where clienteles come from to buy for the first time can influence their behavior.

Characteristics of Cohort Analysis

cohort analysis

This is just an example, for many professionals in the sector, three characteristics help to identify the most valuable cohorts:

The number of orders per customer: This measure reveals the long-term relationship with users. There are specific categories of products that do not usually have a recurrence. Others, however, do, so each consecutive order has a lower or free Customer Acquisition Cost (CAC). Even if the first sale has no margin, as is often the case in competitive niches, subsequent sales make up for the loss. With a strategy in place to drive recurring purchases, occasional spikes in CACs will be more manageable.

Average order value (AOV): Average ticket per order is the average amount of money each customer spends on your business. A larger AOV can compensate for a shorter customer life. And also, increasing the AOV expands the margin on individual orders, especially if one of the products is more profitable than others.

Lifetime Value (LTV ): The LTV reflects the average order value and the number of orders per customer. High LTV numbers mean your brand enjoys customer engagement and loyalty. And also, high LTV has a strong brand image, earns organic and word-of-mouth referrals, and enjoys brand search conversions.

Main Benefits of Cohort Analysis

With what you know so far from the cohort analysis, you can get an idea of the amount and valuable information you can obtain. Here we summarize the main benefits of the data that you can obtain through this analysis.

First, we will have a transparent picture of a user’s post-purchase behavior. This behavior is directly related to their initial experience, their motivation: product, incentives, time of sale, etc.

The study of the cohorts also provides us with information on the use of the product over time. And also, relevant for the control of stock, purchase behavior of users, and the identification of when it makes sense to promote marketing campaigns.

Finally, the cohort analysis offers a clear idea of how marketing campaigns have influenced conversions and recurrence.

Thanks to this behavior, marketing strategies can be modified and adapted according to the interaction trend of users.

Conclusion

Cohort analysis is a countless way to track and analyze buyer behavior and its effects on a business over time.

And also, it facilitates identifying a common trait of the first order, capable of influencing the customer journey and deepening the understanding of buyers’ needs.

The continued use of cohort analysis allows you to enjoy a wide range of new opportunities to boost and increase the recurring sales of your business. Essential!

Also Read: What is Electronic Commerce? – Types, Features, and More

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