Cohort analysis is a type of analytics that looks at the behavior or performance of groups of people (cohorts) who share a common characteristic or experience. For example, a cohort could be people born in the same time period or started schooling in a specific year.

In ChartMogul, a cohort is a group of customers who start their first subscription in the same interval (day, week, month, quarter or year). Cohort analysis allows you to better understand churn, retention and conversion rates based on when customers subscribe and identify points in your customer lifecycle that result in contraction and churn.

Here’s what we cover in this article:

• How cohorts are useful
• Reading a cohort table
• Cohort analyses in ChartMogul
• Configuring your analysis
• Exporting your analysis
• Understanding the data
• Segmenting cohorts

Resources and further reading:

• SaaS Metrics Refresher #6: Cohort Analysis
• Cohort Analysis: A (practical) Q&A (The Angel VC)
• The Ultimate Cohort Analysis Cheat Sheet
• What is Churn? How Can It Be Negative? And What’s a Good Monthly Churn Rate?
• Make trial-to-paid conversion rates more meaningful with cohorts
• How does sales cycle length impact churn?

Before you begin

Read more about how ChartMogul organizes and classifies MRR movements.

How cohorts are useful

To grow a SaaS business, you need customers to continually renew their subscriptions. So it’s important to identify points in your customer lifecycle that result in downgrades (contraction) or cancellations (churn).

Instead of looking at the overall churn rate for all customers, cohorts allow you to compare groups of customers based on when they subscribe so you can answer questions like:

• Which month in the lifespan of a subscription is churn at its highest?
• How did last month’s product release impact churn?
• Are customers acquired on Black Friday more likely to churn than those acquired on regular days?
• How is retention for customers who subscribed in February during our Valentine’s marketing campaign?
• How is retention for customers who signed up using a discount?

Reading a cohort table

The results of a cohort analysis are visualized using a table that may be different from other charts and reports you're familiar with and can be a challenge to read and understand.

Columns

The first and second columns display each cohort’s name (identified by the time of conversion, e.g., Feb 2023) and its value. The remaining columns represent each interval of the cohort’s existence (day, week, month, quarter or year, depending on the cohort type).

Rows

Each row is an individual cohort. Cohorts appear in chronological order. The last row provides an average of the relevant metric across cohorts for each interval.

Cells

Cells show the relevant metric depending on the cohort analysis you select (e.g., churn, expansion, contraction or reactivation) and how you configure it. Future intervals are blank.

Colors

ChartMogul assigns a color to each metric to help you interpret the results of your analysis. Green indicates the metric with the best value (i.e., lowest churn or highest retention rate) and red the worst. The metric falling in the middle is yellow. The remaining metrics are colored using shades along a green-yellow-red gradient to indicate their value relative to the best (and worst) metrics in your current analysis.

Cohort analyses in ChartMogul

ChartMogul offers the following cohort analyses, which you access by navigating to Reports > Cohorts.

Churn

• Customer Churn — the percentage or number of customers who have canceled all of their subscriptions, offset by reactivation.
• Net MRR Churn — the percentage or amount (in your primary currency) of MRR lost due to cancellations, offset by expansion and reactivation.
• Quantity Churn — the percentage or number of subscription downgrades or cancellations, offset by expansion and reactivation.

Retention

• Customer Retention — the percentage or number of customers who have one or more active subscriptions, including reactivation. Learn more.
• Net MRR Retention — the percentage or amount in your primary currency of MRR from active subscriptions, expansion and reactivation, minus churn and contraction. Learn more.
• Quantity Retention — the percentage or number of subscriptions still active, including expansion, churn and contraction.

Conversion

• Conversion of Non-Subscription Customers to Subscribers — the number or percentage of customers who previously made a non-recurring purchase and then purchased a subscription in the selected month. (Available on our Scale and Volume plans)

Configuring your analysis

Type

Use the Type drop-down to select an interval for your analysis:

• Daily cohorts
• Weekly cohorts
• Monthly cohorts (default)
• Quarterly cohorts
• Annual cohorts

Start

Select a time frame for your analysis using the Start date picker. Depending on your Type setting, select the starting day, week, month, quarter or year.

Show

Use the Show drop-down to choose Rate (%) or, depending on the cohort analysis you select, Customers, MRR, Quantity or Conversion.

Relative to

If you select Rate (%) from the Show drop-down, you can use the Relative to drop-down to choose Previous day/week/month/quarter/year or Starting day/week/month/quarter/year.

With Previous day/week/month/quarter/year, ChartMogul calculates the metric as a rate relative to the previous interval. With Starting day/week/month/quarter/year, ChartMogul calculates it relative to Cohort Value.

Include current day/week/month/quarter/year

Select Include current day/week/month/quarter/year to get the most up-to-date insights by including data for the current interval in your analysis.

Understanding the data

Cohorts

A customer joins a cohort when they become a subscriber for the first time, i.e., when their status changes from one of the lead statuses (New Lead, Working Lead, Qualified Lead or Unqualified Lead) to Active Subscriber. Each customer remains in their original cohort regardless of whether they sign up for or purchase a second subscription (expansion) or cancel (churn) and re-subscribe (reactivation).

Intervals

Follow the development of each cohort by interval (day, week, month, quarter or year), starting with interval 0 (when the customers subscribed) and continuing for each interval of the cohort’s existence.

Let’s take a monthly cohort analysis as an example. For a customer who subscribed on April 19, month 0 is April 19–April 30, month 1 is May 1–May 31, month 2 is June 1–June 30 and so on.

While the actual dates for a specific month (e.g., month 3) are different between cohorts, what makes them valuable from an analysis perspective is their distance (in months) to sign up. Knowing, for example, that churn peaks in month 3 is an important insight.

Cohort Value

Depending on the cohort analysis you select, Cohort Value represents one day, week, month, quarter or year of:

• Total MRR (in your primary currency)
• Number of customers
• Number of subscriptions acquired

In the following example, the total MRR for subscriptions sold in December 2023 was $9,850.

Metrics

Depending on the cohort analysis you select, ChartMogul displays one of the following metrics in table cells:

• Conversion — the number of non-subscription customers who started a subscription
• Customers — the number of active customers after churn, expansion and reactivation
• MRR — the amount of MRR after churn, expansion and reactivation
• Quantity — the number of active subscriptions after churn, expansion and reactivation
• Rate (%) — the percentage in change, either relative to the previous month or the starting month

In our example, 9.52% of customers in the October 2023 cohort churned in month 2.

Select the cell to see a complete list of churn activities.

Average

The Average row provides an average of Cohort Value and each month of the analysis. ChartMogul accounts for cohort size (i.e., the number of customers) when calculating these averages.

For example, in a given month, a cohort of two customers experiences 50% churn while a cohort of 100 experiences 25%. The average churn rate (across the two cohorts, weighted by the number of customers) is 25.49% (total number of customers lost / total number of customers) and not 37.5% (the average of the two percentages).

Learn more about weighted averages.

Exporting your analysis

Export your cohort analysis by selecting Export (CSV) above the cohort table.

Segmenting cohorts

Using segmentation as part of your cohort analysis in ChartMogul helps you answer even more complex questions like:

• When does a particular pricing plan experience its highest churn?
• Which sales representative has the highest retention rate?
• How does NPS score correlate with churn rate?