{"id":7865,"date":"2020-03-15T10:50:00","date_gmt":"2020-03-15T14:50:00","guid":{"rendered":"https:\/\/www.shortform.com\/blog\/?p=7865"},"modified":"2022-04-01T14:58:33","modified_gmt":"2022-04-01T18:58:33","slug":"cohort-analysis-in-lean-startup","status":"publish","type":"post","link":"https:\/\/www.shortform.com\/blog\/cohort-analysis-in-lean-startup\/","title":{"rendered":"Cohort Analysis in Lean Startup &#8211; Easy Guide"},"content":{"rendered":"\n<p>You know that in Lean Startup, you should be avoiding Vanity Metrics. These tell you less useful facts about your business and can be a misleading sign of progress.<\/p>\n\n\n\n<p>Instead, look at real metrics with cohort analysis. But what is cohort analysis, and how do you do it?<\/p>\n\n\n\n<!--more-->\n\n\n\n<h2 class=\"wp-block-heading\">Cohort Analysis<\/h2>\n\n\n\n<p>Instead of looking at cumulative vanity metrics over time, the more accurate analysis is to <em><strong>separate<\/strong><\/em><strong> users into groups based on the time they joined<\/strong>, then measure your metric for each group independently. Each group of users is called a cohort.<\/p>\n\n\n\n<p>For example, say we wanted to measure engagement in an app by number of photos sent. Each week, we take all the users who joined that week, and then look at the average number of photos each users send in their first day. We work really hard for 4 weeks, and we hope to see this number rise. Instead we see this:<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td><br><\/td><td><strong>Number of photos sent per user<\/strong> <br><\/td><td> <strong>Vanity metric \u2013 total photos sent<\/strong> <\/td><\/tr><tr><td><strong>Week 1<\/strong><\/td><td>5<\/td><td>100<\/td><\/tr><tr><td><strong>Week 2<\/strong><\/td><td>5<\/td><td>200<\/td><\/tr><tr><td><strong>Week 3<\/strong><\/td><td>5<\/td><td>350<\/td><\/tr><tr><td><strong>Week 4<\/strong><\/td><td>5<\/td><td>500<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p>Notice how despite our hard work, the number of photos each new user sends has not risen \u2013 <strong>we haven\u2019t made any real progress per cohort<\/strong>. However, the vanity metric on the right \u2013 total photos \u2013 has risen, due to the cumulative actions of all users.<\/p>\n\n\n\n<p>In contrast, here\u2019s what progress would look like:<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td><br><\/td><td> <br><strong>Number of photos sent per user\ufeff<\/strong> <br><\/td><td> <br><strong>Vanity metric \u2013 total photos sent\ufeff<\/strong> <\/td><\/tr><tr><td><strong>Week 1<\/strong><\/td><td>5<\/td><td>100<\/td><\/tr><tr><td><strong>Week 2<\/strong><\/td><td>6<\/td><td>250<\/td><\/tr><tr><td><strong>Week 3<\/strong><\/td><td>8<\/td><td>400<\/td><\/tr><tr><td><strong>Week 4<\/strong><\/td><td>10<\/td><td>600<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p>The key metric of photos sent per user is<strong> rising across cohorts<\/strong> \u2013 hard work is paying off and actually improving the metric! (Improvement in this metric also improves the vanity metric of total photos sent, since users are sending more photos.)<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Choosing Good Metrics<\/h3>\n\n\n\n<p><strong>You need to define metrics that really matter to your business, and measure improvements to that metric.<\/strong><\/p>\n\n\n\n<p>The metrics that really matter vary from business to business. Often, they reflect your <a href=\"https:\/\/www.shortform.com\/blog\/value-hypothesis-growth-hypothesis-lean-startup\/\">Value Hypothesis<\/a> and your Growth Hypothesis.<\/p>\n\n\n\n<p>For example, an app might aim for these metrics:<\/p>\n","protected":false},"excerpt":{"rendered":"<p>You know that in Lean Startup, you should be avoiding Vanity Metrics. These tell you less useful facts about your business and can be a misleading sign of progress. Instead, look at real metrics with cohort analysis. But what is cohort analysis, and how do you do it?<\/p>\n","protected":false},"author":2,"featured_media":7872,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[45],"tags":[78],"class_list":["post-7865","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","tag-lean-startup","","tg-column-two"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v24.3 (Yoast SEO v24.3) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Cohort Analysis in Lean Startup - Easy Guide - Shortform Books<\/title>\n<meta name=\"description\" content=\"What is cohort analysis in a startup? How do you analyze cohorts and choose the right metrics? Find lessons from Lean Startup here.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.shortform.com\/blog\/cohort-analysis-in-lean-startup\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Cohort Analysis in Lean Startup - Easy Guide\" \/>\n<meta property=\"og:description\" content=\"What is cohort analysis in a startup? How do you analyze cohorts and choose the right metrics? 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