
Frameworks, core principles and top case studies for SaaS pricing, learnt and refined over 28+ years of SaaS-monetization experience.
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Join companies like Zoom, DocuSign, and Twilio using our systematic pricing approach to increase revenue by 12-40% year-over-year.
In the dynamic world of SaaS, understanding customer behavior isn't just valuable—it's essential for sustainable growth. While traditional metrics like MRR and churn provide snapshots of performance, they often fail to reveal the deeper patterns that drive business outcomes. Enter cohort analysis: a powerful analytical technique that groups users based on shared characteristics and tracks their behavior over time. For SaaS executives seeking to make data-driven decisions, cohort analysis offers unparalleled insights into customer retention, lifetime value, and product-market fit.
Cohort analysis is a behavioral analytics methodology that segments users into related groups (cohorts) and analyzes their actions over time. Unlike static metrics that provide point-in-time measurements, cohort analysis reveals how different user segments engage with your product throughout their customer journey.
In SaaS specifically, cohorts are most commonly organized by:
The power of cohort analysis lies in its ability to isolate variables and identify patterns that might otherwise remain hidden in aggregate data.
According to research by ProfitWell, a 5% increase in retention can boost profits by 25-95%. Cohort analysis provides the clearest view of retention patterns, revealing:
Rather than looking at overall churn rates, cohort analysis helps executives understand if retention is improving with newer customers or declining with specific segments—critical knowledge for strategic decision-making.
Cohort analysis enables more accurate CLV calculations by tracking revenue patterns across different customer groups over extended periods. According to Klipfolio, companies that effectively leverage cohort analysis for CLV projections can achieve up to 33% higher accuracy in their revenue forecasts.
This precision is invaluable for:
For SaaS companies, achieving product-market fit is the foundation for sustainable growth. Cohort analysis provides concrete evidence of whether you're moving toward or away from this critical milestone.
As Sean Ellis, founder of GrowthHackers, notes: "True product-market fit reveals itself through retention cohorts that flatten over time rather than trending toward zero."
When you launch new features, change pricing, or implement customer success programs, cohort analysis shows their true impact by comparing behavior before and after implementation across different user segments.
This capability transforms ambiguous "improvements" into measurable outcomes tied to specific customer groups and initiatives.
Begin with specific questions you want to answer:
Your objectives will determine which cohorts to analyze and which metrics to track.
Choose the most relevant method for grouping your users based on your objectives:
For maximum insight, try analyzing the same metrics across different cohort types to identify correlations and patterns.
While retention is the most common focus of cohort analysis, consider tracking:
The appropriate time frame depends on your sales cycle and customer journey:
Most cohort analyses should extend at least 3-4x your average sales cycle to reveal meaningful patterns.
Cohort tables typically show time periods across the top and cohort groups down the left side, with cells containing the metric values. The most valuable insights often come from:
According to data from Amplitude, companies that regularly perform all three types of cohort analysis are 26% more likely to identify actionable retention insights.
The ultimate value of cohort analysis comes from the actions it inspires:
The most fundamental cohort analysis shows what percentage of users remain active over time. A typical retention cohort table might look like:
| Cohort | Month 1 | Month 2 | Month 3 | Month 4 | Month 5 |
|--------|---------|---------|---------|---------|---------|
| Jan 23 | 100% | 87% | 76% | 72% | 70% |
| Feb 23 | 100% | 85% | 77% | 74% | 71% |
| Mar 23 | 100% | 88% | 79% | 75% | - |
| Apr 23 | 100% | 90% | 82% | - | - |
| May 23 | 100% | 92% | - | - | - |
This example shows improving early retention (Month 2-3) for newer cohorts, suggesting recent product or onboarding improvements are working.
Revenue retention cohorts track how much revenue is retained (or expanded) from each customer group over time:
| Cohort | Month 1 | Month 2 | Month 3 | Month 4 | Month 5 |
|--------|---------|---------|---------|---------|---------|
| Jan 23 | 100% | 95% | 103% | 110% | 115% |
| Feb 23 | 100% | 97% | 105% | 112% | - |
| Mar 23 | 100% | 98% | 107% | - | - |
Values above 100% indicate net revenue expansion through upsells and cross-sells exceeding any revenue lost to downgrades or churn.
These cohorts track how users adopt specific features over time:
| Cohort | Week 1 | Week 2 | Week 3 | Week 4 | Week 8 |
|--------|--------|--------|--------|--------|--------|
| Jan 23 | 15% | 28% | 35% | 42% | 55% |
| Feb 23 | 18% | 32% | 40% | 48% | 62% |
| Mar 23 | 25% | 40% | 52% | 60% | 70% |
This example shows substantial improvement in feature adoption rates among newer cohorts, potentially indicating successful product education initiatives.
Join companies like Zoom, DocuSign, and Twilio using our systematic pricing approach to increase revenue by 12-40% year-over-year.