Cohort analysis

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Cohort analysis is “gold-standard” method for understanding the financial health of SaaS businesses. Professional investors rely heavily on cohort analysis to determine the understanding churn, retention, and unit profitability of SaaS businesses. In this chapter, we continue our walkthrough by calculating key cohort-level metrics. In these lessons, you’ll learn: Optional pre-reading

How does this compare to “overall LTV/CAC”? You might recall when we calculated overall LTV/CAC in the SaaS Metrics lessons, we saw that the overall LTV/CAC seems to be getting worse, as shown below. Now, having calculated the individual LTV/CAC cohorts, we see that indeed the more recent cohorts seem worse than the less recent

FAQ: Why does the CAC payback by cohort calculation use the formula “S&M expense + (ARR x Gross Margin / 4)” instead of “S&M / (ARR x GM)”? In the cohort calculation, we’re just trying to determine if we’ve made our money back in dollars from the investment in CAC, or if we’re still “in

FAQ: How can I calculate gross logo retention by cohort? To calculate gross retention by cohort, follow the same approach outlined in the tutorial for ARR and Net Revenue Retention, but use the number of active customers as the key metric. But instead of computing “ARR by Cohort,” you’ll be calculating “Customers by Cohort.” To

FAQ: On Column B of the “Raw Customer ARR” tab, what does the nested Index() function do in the Cohort Analyses formula? Here is an explanation of the formula step by step: Formula: =INDEX(C$1:S$1, MATCH(TRUE, INDEX(($C2:$S2 <> 0), 0), 0)) Overall, this formula is designed to find the first non-zero value in the range C2:S2