Are you a student of business? If yes, then you must have an idea of the cohort analysis. Ohh, you do not know about it? Well, it is very astonishing. However, there is no need to worry. This analysis is mostly used by businesses to gain insights into their customer’s behaviours and know how to make their long-term retention possible. However, this is not the actual definition of this analysis. In today’s article, we will discuss the cohort analysis, its purpose, and the steps needed to carry out this analysis. So, let’s start with the definition.
What is cohort analysis?
A relatively new technique in Google Analytics, cohort analysis is defined as the way of analysing different subjects when they are grouped. Yes, a cohort is simply a group of people or things who share the same characteristics. These characteristics may include their age, race, ethnicity, data about buying behaviour, or the device they use to buy things. Many more things can come in the characteristics of the cohort.
What is the purpose of a cohort analysis?
So, what is the purpose of a cohort analysis? Why do businesses use this analysis method? We know that these sorts of questions are roaming in your mind right now. Well, do not worry; we have an answer to all of your questions. The purpose of this analysis is described below:
- The first and most important purpose of this analysis is to know the health of your business. Studying the behaviours of the customers, it lets you know where your business is standing right now.
- The second purpose of cohort analysis is that it allows you to track the customer’s buying pattern and customer life cycle. It also enables you to trace the life cycle of customers of different age groups.
- This analysis serves the purpose of helping businesses make informed decisions. It also helps them make future predictions about their customer’s buying behaviour.
Major steps in performing a cohort analysis
After reading the information, you now have sound knowledge about the purpose and meaning of this analysis. Now, let’s see how you can implement or perform it in an academic setting. The major steps for performing this analysis are 5 in number. Hence, a brief description of each step is as follows:
1. Determine the questions to ask
The first and most important step for cohort analysis is determining the right set of queries. It means you must have defined goals in front of you before doing this analysis. It could be anything. For example, it could be about how you can increase customer retention or any other thing related to your business. The main thing is that you must have something to ask.
2. Define the measurement metrics
As the analyst, the second step you need to carry out is defining the measurement metrics. These are the things based on which you are going to evaluate the collected information. It is necessary that you define these metrics prior to the analysis. It will benefit you a lot. However, if you cannot decide on the measurement metrics, ask for help from a dissertation help UK.
3. Make the groups
The third step in performing a cohort analysis is to make the groups or cohorts. How do you make these groups? Yes, exactly; you make these groups based on the research queries set in the first step. By knowing the variables to study, you divide the people under observation or your research data into several groups. Make sure that each group share the same properties.
4. Perform the analysis
Finally, the step you have been waiting for has arrived. Once you have developed the representative groups, perform the analysis using any method. Mostly, the data visualisation method is used to study the groups and find hidden patterns in them. This method is backed by the use of different colours and coding of the data. Hence, do the analysis, no matter using which analysis method.
5. Evaluate and share the results
Lastly, the obtained analysis results are analysed and shared with the company’s management. As the analyst, you evaluate the results using the frequency of occurrence of different things. It is important to note here that cohort analysis is a dynamic analysis which keeps on changing. So, you must be wary of this thing and evaluate results based on the updated approaches.
To sum up, a cohort analysis is an analysis method based on splitting the data into different groups. The groups that you create share the same characteristics. The main purpose of this analysis is to allow businesses to make informed decisions. Hence, to make such decisions, it is important that you know about the steps involved in this analysis. Some of the top steps are mentioned above. Hence, read them, follow them, and perform the analysis accordingly.