Using cohort analysis to understand your SaaS business | Growth Hacking Brussels
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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.
Using cohort analysis to understand your SaaS business | Growth Hacking Brussels
- 1. P0 GROWTH HACKING BRUSSELS – APRIL 2014 Using cohort analysis to understand your SaaS business Growth Hacking Brussels
- 2. P1 GROWTH HACKING BRUSSELS – APRIL 2014
- 3. P2 GROWTH HACKING BRUSSELS – APRIL 2014 Cohort Analysis?
- 4. P3 GROWTH HACKING BRUSSELS – APRIL 2014 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
- 5. P4 GROWTH HACKING BRUSSELS – APRIL 2014 What? in practice First payment date Evolution over time # of paying accounts for MyStartup
- 6. P5 GROWTH HACKING BRUSSELS – APRIL 2014 What? in practice First payment date Evolution over time Accounts in December # of paying accounts for MyStartup
- 7. P6 GROWTH HACKING BRUSSELS – APRIL 2014 Cohorts to calculate KPI’s # of paying accounts for MyStartup Churn rate = % of people leaving the service month over month.
- 8. P7 GROWTH HACKING BRUSSELS – APRIL 2014 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
- 9. P8 GROWTH HACKING BRUSSELS – APRIL 2014 Cohorts to calculate KPI’s ARPU for MyStartup ARPU = Average Revenues Per User = Turnover / # of users
- 10. P9 GROWTH HACKING BRUSSELS – APRIL 2014 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
- 11. P10 GROWTH HACKING BRUSSELS – APRIL 2014 Impact of marketing on your cash flow and months to recover your investments: Cohorts to calculate KPI’s
- 12. P11 GROWTH HACKING BRUSSELS – APRIL 2014 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
- 13. P12 GROWTH HACKING BRUSSELS – APRIL 2014 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
- 14. P13 GROWTH HACKING BRUSSELS – APRIL 2014 Cohort tools
- 15. P14 GROWTH HACKING BRUSSELS – APRIL 2014 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!
Editor's Notes
- #2: Used a lot for Saas businesses with monthly subscription. A great analysis to understand/improve your business and go to VCs with strong figures