Cohort analysis is a marketing term, very specific to e-commerce marketing. It is indispensible to the marketers and is used to evaluate trends that last in the customer’s memory. It uses data collected from online shopping websites, applications for phone or the tablet or games. It considers individuals like players of a game or frequent online shoppers as individuals rather than a large, collective unit.

These groups of people displaying certain characteristics often have a shared experience that they encountered, in a certain time frame. Cohort analysis enables a firm to visualize patterns of a user throughout his lifespan instead of analyzing the accumulative features, which may or may not be relevant. Once a firm has studied these patterns it can customize its product or service to suit the cohorts it was analyzing initially. Cohort analysis must be conducted in a controlled manner considering certain aspects that are mentioned below.

What will the question be?

When you decide to conduct the analysis the purpose is to come up with relevant information that will improve the customer experience and yielding in higher profitability for the firm. For example for a mobile phone company which is targeting youth, they must assess what times do youngsters use their phones to call, send text messages or use Internet data, the most. This will enable them to reach their target audience easily.

How will the question be answered?

A cohort analysis is thorough when it specifies and differentiates the cohorts based on their, for example, virtual shopping/gaming, behavior. This can be enabled while watching the user’s checkout balance. In the case of young mobile users what is the average amount they spend per week/month on mobile credit? Do they rely on pre-paid or post-paid? Do they function on mobile plans that are linked to their parents’ phone plans? The success of your firm is based on the cohort’s willingness to buy the product or service.

Which cohorts are indispensable?

Cohorts that are pertinent to the analysis must be scrutinized effectively. When evaluation occurs one must target all the users, but as the study gets more advanced certain cohorts are more relevant than other based on their shopping/gaming behaviors so these cohorts are put into two categories basic and advanced.

Cohort analysis is an integral tool when used effectively, it can boost a business to its optimum profitability.