If you are already heavily into online marketing analytics, this may rapidly become one of your more valuable marketing analysis tools. If you are a newbie to marketing analysis and are not yet familiar with Google’s new tool, here is some help in understanding what it is all about.
First of all, cohort analysis is not new. It is Google’s tool that is new. A dictionary definition of a cohort is simply a group or band of people. That notion is at least as old as Ancient Rome, where a legion of soldiers was broken down into ten cohorts. In its more current usage, cohort analysis has been performed for many years. Insurance companies, for example, have used this idea to create data for actuarial tables, mortality rates, etc.
Simply put, cohort analysis is the breakdown of populations into smaller, easily definable groups. The purpose of analyzing the characteristics of these sub-categories is to determine common behaviors usually specified in relation to a time period in the buying cycle or a specific date. The patterns discerned can show a business how its customers relate to the product in the early stages of experience with it, as opposed to how customers relate to it later in the buying process.
Cohort analysis provides the ability to tailor marketing to these specific sub-groups. There could be a cohort of customers at the time of checkout, for example. Another cohort might describe the behaviors of customers who responded to a specific advertising channel that was presented over a short period of time. Common metrics that can be revealed include the date your customers first clicked on your link. Others are when they bought from you the first time, or the second, or third time.
If a cohort reveals, for example, the trends common to your higher-paying customers, you can then tailor your next marketing channel to their specific interests and needs, thus encouraging more higher-paying sales.
Google is still tweaking their cohort analysis tool, so more options for its use are likely to appear in the near future. For the time being, you can access the tool and use it to familiarize yourself with how it works. Here is how to do that:
If you do not already have an analytics account, sign up for one at Google.com/analytics. Once you have an account, sign in and click YOUR VIEW. From there, select REPORTING, then AUDIENCE, then COHORT ANALYSIS. From here, you can tailor your forthcoming report options.
At this stage of tool development, your choices include the acquisition date, cohort size, and date range, for example.
o Acquisition date can refer to the first time your customer does whatever it is you are exploring, such as first visit, first purchase, etc.
o Cohort size permits you to select day, week, month, quarter, or year, for example, to find out how many users did something during that period.
o The metric refers to the data you see, such as the number of page views, purchases, etc.
o The date range, obviously, is the period you are exploring. If your cohort size was designated as a day, you get information for each day in your selected date range.
Play around with Google’s new tool for a while to get used to what it can show you. As is the case with all good tools, practice with it now will make using it easier when its functionality is increased as more options are added.
Using the cohort analysis report is an option that can improve business performance through better understanding of your customers and their patterns of behavior. The more you know about your customers, the better you can meet their needs and increase your bottom line.