Guest post by Dan Schoenbaum.
Businesses are constantly in search of useful tactics that improve their brand’s performance and bottom line. Cohort analysis, often overlooked, is proven to yield insightful information and actionable advice to improve conversion rates, engagement and revenue.
Kissmetrics says examining overall results lumps together information from new and old users masking valuable details needed for strategic decision making. With Gartner predicting the global business intelligence and web analytics tools market to reach $18.3 billion in value this year, it’s time to start making smart decisions with your data.
Here are seven ways cohort analysis can optimize company performance and results:
Effects of Unique Behaviors
Identifying users by individual actions they take on your app or website is vital to retention. Utilizing this information paints an invaluable picture of users and their journey with your product.
For example, the online gaming industry is remarkably known for seamless user experiences, and cohort analysis allows you to improve your UX model. Accelerated growth in this industry requires in-depth knowledge of user behavior that leads to in-app purchases or the decision to uninstall. Identifying the habits of your most valued players is essential to optimizing retention.
During a case analysis of Lucky Fish, online gaming company, the goal was to discover a cost effective and scalable solution for optimization. By analyzing player behavior and game performance, Lucky Fish was able to cater their offerings with automated and personalized marketing campaigns.
Test Your Hypothesis
Let’s say you have a strong inclination to believe a user performs a certain behavior for a particular reason that results in increased trial sign ups. Proving this is necessary and possible by analyzing segmented cohorts.
For example, if you assume a particular action, like a button or a popup, on your website or app may be the key to increasing signups, through cohort analysis you can define groups immediately and analyze their response to said action. Using cohort analysis to control for individual variables allows brands to witness the effect of certain actions.
Optimizing Conversion Funnel
Cohort analysis takes a look at the bottom of the funnel to the top and gives businesses the opportunity to improve conversion funnel optimization. Awareness of sticking points, factors that form habitual users, is key to improving funnel conversions.
This value-add to the consumer could be a new connection on a social networking site or free up a new level of a game. Comparing users with a noticeable drop in engagement to those that are loyal users is a good place to start.
Customer Acquisition by Channel
Now that you are on your way to optimizing your conversion funnel, focusing on independent mediums is critical.
Monthly segmentation by revenue gained from each channel illuminates your highly efficient sources of acquisition as well as the least effective.
Define What You Want to Control
Cohort analysis lets you compare apples to apples. For example, comparing people who signed up in June, when the brand was offering a 25% coupon versus July, when there was no coupon. Then, assuming we’re analyzing conversion rates, it is easy to see how many of these people convert over time.
The key is to segmented users is based on clearly defined groups. Defining these cohorts means the ability to compare results to see how each group responded to a specific action. Then, you can analyze behavior, optimize engagement, reduce churn and improve monetization.
Analyze Users’ Time to Take Desired Action
Analyzing your best customers produces retention and conversion insights. This information allows you to continuously improve the time necessary for a user to take the desired action.
Case in point, the Fintech industry is notoriously known for its competitive culture and has a lot to gain from cohort analysis. Its inherent nature of long-term engagement provides the perfect environment for analyzing appropriate actions.
Long-term engagement within the Fintech industry allows companies to analyze behaviorally segmented users who completed certain desired actions that resulted in retention versus certain actions that resulted in churn. This specific information yields the opportunity to optimize marketing campaigns, ROI and retention cycles.
Let’s say you have a poor performing channel that, with improvement, could achieve increased retention rates. Segmenting users by different channels is beneficial when the goal is to enhance retention.
SaaS brands often launch new products and platform upgrades while utilizing analytics to provide critical churn/retention insights. Cohort analysis allows brands to separate and analyze users by those who signed up after a new product launch or upgrade detailing fundamental behavior differences.
Cohort analysis is a powerful tool for companies to understand their customers behavior, in order to increase user engagement, conversion rates and revenue. With the right platform to gather and analyze user behavior, you can increase retention rates in poor performing channels, put heavier resources behind channels that produce. Resulting in the identification of user patterns and trends that are otherwise missed opportunities.
About Dan Schoenbaum: Dan Schoenbaum, CEO of Cooladata, business intelligence, and behavioral analytics platform, is utilizing cohort analysis to bring advanced analytics solutions to fast-growing digital companies that rely heavily on user behavior insights.
About Cooladata: Understanding what drives customers to your online brand is imperative. Applying the behavioral analytics approach is the key to comprehending their digital behavior over time. Single touch point data, common with Google Analytics, can only get you so far. Cooladata is taking one-dimensional data a step further and providing valuable insights by tracking long term behavior. CoolaData, a business intelligence platform that leverages behavioral analytics to improve conversions, offers an end-to-end approach providing businesses a complete picture of a consumer’s journey.