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Back in the day, a SaaS company was trying to figure out why they were losing customers. They tried all sorts of methods to understand their customers' behavior, but somehow all their efforts went down the tubes.
One day, a wise data analyst after learning about their challenge, suggested they try cohort analysis. The concept was met with an element of surprise by the staff of the SaaS company.
The analyst explained "Cohort analysis is a way of grouping customers based on their similarities and tracking their behavior over time."
The company was intrigued and decided to give it a try. They grouped their customers into different seat-based cohorts and began tracking their behavior.
With this newfound insight, the company was able to take action and reduce their customer churn.
So, what’s the moral of the story? Cohort analysis is a powerful tool for understanding customer behavior and identifying patterns that can lead to early identification of customer churn. Let’s learn more about cohort analysis.
Cohort analysis falls under the category of behavioral analytics. It is an approach used to study customer behavior by clustering them into similar groups, called cohorts.
Typically, these groups share common attributes or have experienced similar experiences within a specific timeframe, such as the date they became customers or the number of licenses they purchased etc.
By tracking the behavior of each group over time, businesses can gain valuable insights into customer behavior. It helps businesses to understand the impact of changes in pricing on customer behavior, and make data-driven decisions for their business accordingly.
Create your free account with Dataflo to do a cohort analysis of your customers. By accurately calculating the MRR metric and correctly understanding Churn, you can make informed decisions about your business and improve customer retention.
Related: Struggling to determine the right method for calculating MRR for your business? Read more on how to avoid making errors while calculating MRR.
Seat-based cohort analysis is a powerful tool for businesses looking to understand and reduce their customer churn rate and take their subscription to the next level.
In SaaS B2B, seat-based cohort analysis involves grouping customers by how many seats or licenses they purchased and then watch their behavior over time.
By analyzing the behavior of these different seat-based groups, businesses can gain valuable insights into customer behavior and identify patterns that may indicate a higher likelihood of churn.
These insights can then be used to embrace strategies that enhance customer retention and optimize your overall subscription experience.
One key advantage when it comes to seat based cohort analysis is that it empowers SaaS businesses to understand the relationship between the number seats/licences and customer behavior.
For example, businesses could notice that customers who who are purchasing more licenses are churning less relative to those who purchase fewer seats or licenses.
This information can be quite insightful and offers opportunities for upselling and cross-selling to your customers. This in turn can help increase revenue and reduce churn.
Another benefit of seat-based cohort analysis is that it can help a business determine how consumers respond to changes in price or packaging.
For instance, if a business intends to change its pricing model, it can use seat-based cohort analysis to understand the impact of this change on the behavior of different seat-based groups.
This kind of information can be used to make data-driven decisions about pricing and packaging, which thus prevents subscriber churn and increase revenue.
Seat-based cohort analysis can be an extremely valuable methodology for businesses that are looking for ways to reduce their customer churn rate and level up their subscription management.
By gaining a deeper understanding of customer behavior, businesses can identify patterns that may increase churn and take steps to address it for good.
Companies can utilize this data to make informed decisions regarding pricing and packaging strategies which ultimately will increase customer retention.
Dataflo's comprehensive suite of tools and resources make it easy to meet customer demands and drive business growth. Book a Demo today and unlock the full potential of your SaaS business with our powerful cohort analysis features.
As a rising leader, Anand is dedicated to helping his team succeed by inculcating a great culture of collaboration. His passion for technology that knows no bounds has helped elevate the company to new heights. He loves photography, listening to music, and watching thriller movies. He’s also into fitness—it keeps him feeling good and healthy!
