Cohort analysis
Definition
Cohort analysis groups customers by a shared starting characteristic — usually acquisition month — and tracks their behaviour over time, revealing retention and value patterns that blended averages hide.
Blended metrics mix new and existing customers, so a business with collapsing retention can show stable averages while acquiring aggressively. Cohorts separate the two, making it obvious whether each month of new customers is behaving better or worse than the last.
The most useful cohort views are revenue retention by month since acquisition, repeat purchase rate at fixed windows, and CAC by acquisition cohort. Together they show whether growth is compounding or simply being purchased.
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