SaaS Churn Cohort Analysis (Everything You Need To Know)

In this guide, we'll explain everything you need to know about SaaS churn cohorts and how to leverage this data to combat churn in your business.

Churn
June 17, 2022

SaaS churn cohort analysis is essential to understanding and reducing customer churn.

When it comes to combating SaaS user churn, data is key.

Cohort analysis helps identify trends and issues among groups of customers who share similar characteristics, providing valuable insights that you can use to reduce churn.

By understanding what factors are causing customers to leave, you can take steps to address these issues and improve retention rates.

In this guide, we'll explain everything you need to know about SaaS churn cohorts and how to leverage this data to combat churn in your business.

What is cohort analysis?

Cohort analysis is a type of behavioral analytics that tracks groups of users who share common characteristics over time.

This analysis is used to identify trends and issues among these groups, providing valuable insights that you can use to improve retention and reduce churn.

ChristophJanz_CohortAnalysisNotes.001
Source: Andrew Chen

There are two different types of cohort analysis that need to know about:

Acquisition cohort groups are formed based on when they started using your SaaS product.

With acquisition cohort analysis, you can see the following:

  • How SaaS product development impacts user segments over time.
  • Whether or not you are increasing time-to-value across user segments.

Behavioral cohort groups are formed based on the events that led to churn.

With behavioral cohort analysis, you can see the following:

  • Whether certain subscription plans are offering greater value for money.
  • Which user segments are unlocking the most value from the product.
  • Which product features you should encourage users to adopt.

Let's focus on the last point for a second.

When you know which product features user segments (with high CLTV) are using, you can start to focus on driving adoption for those features across your entire user base.

It's like you are reverse engineering your own SaaS product to work out what makes it sticky for a specific set of users.

Once you identify which features create the most stickiness and keep users engaged, you can bring these to the forefront of your onboarding processes.

SaaS Churn Cohort Analysis

Why is churn cohort analysis important?

You can use churn cohort analysis to raise and answer different questions about user segments.

For instance, how long does the average user stick with your product?

When and why do they decide to churn?

You can use these findings to increase your understanding of customer behavior and take steps to improve retention.

Stickiness is a key trait of successful SaaS products.

SaaS cohort analysis will enable you to understand how long it takes for the average user to become disengaged and unsubscribe.

It also equips SaaS founders with the data they need to make informed decisions on product development.

This is essential for any company that wants to reduce churn and improve retention.

How can you conduct SaaS cohort analysis?

SaaS cohort analysis is completed using a cohort table.

As a visual chart, you can plot and compare metrics for each cohort over time.

Each cell will typically include the percentage of customers (in a user segment) that churned relative to the previous month.

You can use this data to identify trends and take steps to improve retention.

How can you utilize cohort retention analysis?

There are a few key ways to utilize cohort retention analysis:

  • By identifying which cohorts have the highest churn rates, you can focus your efforts on reducing churn among these groups.
  • By understanding the reasons behind why customers in each cohort are leaving, you can take steps to address these issues and improve retention.
  • By tracking the progress of each cohort over time, you can identify trends and issues early on and take steps to address them before they result in high churn rates.

What are the best cohort analysis tools?

There are a few different cohort analysis tools that you can use to track your data.

Google Analytics is a great place to start.

Google Analytics is a popular option, as it offers a number of features that are specifically designed for cohort analysis.

You can isolate and create user segments based on variables such as cohort size, date range, and metrics such as user retention.

Alongside your SaaS churn cohort analysis efforts, you can leverage Raaft's dashboard for real-time data on all of your customer's actions inside your retention flow.

This will give you the data needed to begin segmenting users.

Raaft enables SaaS companies to set up retention flows for users.

You can collect data on how many people enter your retention flow and the most frequent motivators for those who choose to leave.

You can get started with Raaft for free.

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