This document discusses how cohort analysis can be used to understand a SaaS business. Cohort analysis breaks users into groups based on common characteristics or experiences within a defined time period. It can be used to calculate key performance indicators like churn rate, average revenue per user (ARPU), and lifetime value. Cohort analysis tracks metrics like number of paying accounts, monthly turnover, and cash flow over time for each cohort to understand user behavior and the impact of marketing. It provides guidelines that lifetime value should be more than 3 times customer acquisition costs and months to recover customer acquisition costs should be less than 12 months.

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Using cohort analysis to
understand your SaaS business
Growth Hacking Brussels

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Cohort Analysis?

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What?
 Cohort analysis is a subset of behavioral
analytics that takes the data from a given
eCommerce platform, web application, or
online game and rather than looking at all
users as one unit, it breaks them into related
groups for analysis. These related groups, or
cohorts, usually share common
characteristics or experiences within a
defined timespan.
Wikipedia

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What?  in practice
First payment date
Evolution over time
# of paying accounts for MyStartup

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What?  in practice
First payment date
Evolution over time
Accounts in December
# of paying accounts for MyStartup

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Cohorts to calculate KPI’s
# of paying accounts for MyStartup
Churn rate = % of people leaving the service
month over month.

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Cohorts to calculate KPI’s
Monthly turnover for MyStartup
Churn rate can be positive and applied to any metric
like % of active users, # of users or turnover

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Cohorts to calculate KPI’s
ARPU for MyStartup
ARPU = Average Revenues Per User
= Turnover / # of users

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Lifetime value = ARPU * Gross margin *
1
Churn rate
Lifetime value = 60€ * 75% *
= 2250€
A customer stays on MyStartup during 50 months on average
1
2%
Cohorts to calculate KPI’s

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 Impact of marketing on your cash flow and
months to recover your investments:
Cohorts to calculate KPI’s

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 Months to recover your investments:
Cohorts to calculate KPI’s
-350,000 €
-300,000 €
-250,000 €
-200,000 €
-150,000 €
-100,000 €
-50,000 €
- €
50,000 €
100,000 €
150,000 €
December
November
October
September
August
July
June
May
April
March
February
January
Cash flow to finance

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 Two key guidelines for SAAS startups:
Lifetime value > 3* CPA
Months to recover CPA < 12 months
 Max CPA for MyStartup = 540€
Inspired by http://www.forentrepreneurs.com/saas-metrics/
Cohorts to calculate KPI’s

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Cohort tools

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Let’s discuss some hacks over a drink!
Contact
Hubert de Cartier
Co-founder
+32 (0) 81 713 431
hubert@universem.be
@hubcy
Available on Slideshare as of tomorrow!