General Assembly

STUDY GUIDE

COHORT AND SEGMENT

ANALYSIS
Segments vs. Cohorts
Make sure you know the difference between a segment and a cohort.

» Segment is a broad term that refers to any group of customers with a shared trait (e.g., "women
between the ages of 35 and 55").
» Cohort has a much narrower meaning: a cohort is a segment that is unified by a highly specific event
or experience (e.g., "users who signed up in April 2016").

Segment Analysis
Segment analysis involves comparing the behavior of different customer segments to uncover anomalies,
trends, or new questions your brand could be asking.

Examples of segment analysis:

» Grouping customers by acquisition source (e.g., Facebook ads, search engine marketing, Instagram
ads) and looking at the average revenue per customer for each group.
» Grouping customers by geographic location and comparing the average cost of acquisition for each
group.

Cohort Analysis
Cohort analysis involves comparing the behavior of different cohorts of customers.

The most common type of cohort analysis groups customers by sign-up date and examines the behavior of
those groups over time.

Examples of cohort analysis:

» Grouping customers by the month they downloaded your app and tracking the percentage of each
group that still uses the app in the months that follow.

»
» Grouping customers by the month they made their first purchase and looking at the revenue earned
from each group over time.

Retention and Churn

Cohort analysis is especially useful for tracking retention and churn.

» Churn is the percentage of customers who stop being customers (e.g., high churn might mean that
many users who subscribe to your service unsubscribe after a short period of time).
» Retention is the percentage of customers who keep making purchases from your brand (e.g., high
retention means that many of your customers make multiple purchases from your brand over time).