Cohort Analysis
Grouping users by their signup date to track retention, revenue, and behavior patterns over time.
What it means
Cohort analysis divides your users into groups based on when they signed up (e.g., all January signups are one cohort) and tracks their behavior over subsequent months. This reveals whether your product is improving - if newer cohorts retain better than older ones, you're making progress. Without cohort analysis, averages can hide dangerous trends like worsening retention masked by growing signups.
Why it matters
Averages lie. Your overall retention might look stable even while each new cohort retains worse - because older, loyal customers prop up the average. Cohort analysis exposes the truth. It's the most important analytical tool for understanding product-market fit and the impact of product changes on user behavior.
What is cohort analysis?
Cohort analysis groups users by signup date and tracks their behavior (retention, revenue, engagement) over time to reveal trends that averages would hide.
Why is cohort analysis important for SaaS?
It reveals whether your product is truly improving. Better retention in newer cohorts means product changes are working. Worsening cohorts are an early warning signal even if overall metrics look stable.
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