Cohort analysis is a study that focuses on the activities of a particular cohort. A cohort is a group of people who share a common characteristic over a certain period of time. Hence, Cohort analysis allows you to study a group of people/users who share the same characteristic, i.e the same sign up month and see how they perform over time.
This enables businesses to compare the effectiveness of a marketing campaign, a new feature or the impact of increasing prices. Being able to do this quickly for almost any metric can transform your business. For marketers, a typical cohort can relate to things like users, visitors, leads,customers etc. Essentially these are all pieces of your marketing funnel that you can compare for different segments of people — April vs. May, New Client vs. Existing, AdWords vs. LinkedIn Ads etc.
Calculating cohort metrics can be really complicated.To begin with, there are numerous ways of structuring the cohort table and visualizing the results. Reading and understanding the results is still the more challenging part of the analysis so we will spend some time on that at the end of the code.