Cohort Analysis for App Monetization (appclover.com)

Cohort analysis is a method of behavioral analytics that splits customers or a user base into various related groups to help give businesses a better view of various patterns customers may follow. 

This particular method of analysis is a great tool that will allow businesses to see certain patterns and activities carried out by different user types, and in the app industry, not only can this prove to be a great way to understand your app user base better, but it can also be used to help shape your app monetization methods.

The truth is, no two users are going to be the same, so treating them as one combined user base really won’t help you achieve big revenue goals. In fact, even if you are getting value out of a large percentage of users, there are still many users that don’t fit into the criteria set out by your average user base, and if you want to truly make the most out of your app monetization methods, cohort analysis is one of the best ways to help your business understand exactly what kind of users are using your app.

Even if you don’t use it as your main analytical tool, it’s still handy to have some kind of cohort analytics running for your app.

Cohort Analysis and App Monetization: How it Works

With cohort analysis, each user will be assigned to a cohort that matches details about their particular spending habits and activity within your app. You will be able to see exactly when certain groups stop spending, and what groups spend the most.

With this information, you can do a variety of things. Firstly, it’s possible to understand what kind of things each cohort will spend on, and how much they are willing to spend on items or IAPs (in app purchases) within your application. This is useful for understanding what IAPs are performing the best, and what kind of content your user base is willing to spend extra money on. You can also see exactly when certain cohorts stop spending, and then take this into consideration for when more users download your app.

For example, if you just received a large number of new users from a marketing campaign, and you see that their IAP spending drops significantly on their fifth day of use, the next time you use that same marketing strategy to increase your user base, you can prepare for this drop and put a IAP discount or offer incentives for users to continue spending on their fifth day of using the app.

Cohort analysis is a great tool for understanding just how well your IAPs are selling, so if you need to get better control over your in app purchases, you should definitely consider getting a cohort analysis tool.

Questions you can answer with Cohort Analysis:

• How many of your users are spending?
• How long does it take them to start spending?
• For how long do they keep spending?
• What are they spending money on?
• Which segments of users are spending the most?
• How much are users acquired though a marketing campaign spending?
• Have recent changes to the app impacted spending?
• Retention: Are users coming back regularly to the app?
• Engagement: Are users “active” within the app?
• Monetization: Are users spending money?

Cohort analysis and reports are in-built into most of the app tracking tools out there. If the tool does not provide this kind of reporting you should maybe consider a different one.