TLDR: Future Flow’s Cohort Template is a simple Google Sheets file to understand how a dataset can be converted to cohort analysis and transform your own data into insightful cohorts.
The Template includes a sample dataset of customers and their purchases over several months. It manipulates the dataset to draw the different cohort tables (customer and revenue cohorts), as well as trend charts.
You can change the dataset to your own data (up to around 20,000 rows).
What can you expect to see in the Template? Let’s go through:
Cohorts will allow you to instantly detect important patterns in your business. Let’s go through the 3 key patterns.
A cohort might have a different behaviour than other cohorts… maybe a marketing campaign attracted a different profile of customers? What did you do differently for this cohort?
You might detect that most cohorts behave unexpectedly a few periods within their life… In the case above, something is happening during Month 3 of every cohort, with much more activity that in previous and following month. What’s happening during this period? Maybe you have a re-activation campaign being sent to all customers after 3 months? Can you replicate over other periods to leverage such positive impact?
Because we’re using relative periods, a specific month will show up as different relative periods for every cohort (eg. cohort of June will see August being Month 2, while cohort of July will have the same month of August as Month 1). You might find that some calendar periods impact your cohorts… Christmas, Chinese New Year, and similar festivities for example. Which are the periods impacting your business?
For recurring businesses, at each period, the period’s revenue is the sum of revenue contributed by each cohort for this period.
When churn rate is high, previous cohorts only contribute smaller and smaller amount over time, generating such downward trending area.
When churn rate is small, each new cohort increase the total revenue by an amount approximately equal to the cohort size
The Holy Grail, negative churn, leads to revenue growing thanks to both (a) growth in revenue from previous cohorts and (b) new revenue contributed by new cohorts.
Turning the retention of each cohort into a chart allows to compare the trend of such retention… Ideally a business will be better and better at reducing churn, which should show up by having cohorts retention lines going down slower and slower (or even going up if negative churn is achieved).
With churn rate becoming worse, the darker lines (ie more recent cohorts) are falling faster and faster. You don’t want to see that for your business. Why are your customers leaving you faster and faster?
In this case, we see the darker lines (more recent cohorts) falling less and less, sign of improving churn rate.
If you wondered how to generate Cohorts Analysis for your own business, get the template now. You can update the dataset to your own data and you will be set, with your cohorts ready to use.