What is a Cohort Report and why is it important to a SaaS business?
MRR is an acronym for Monthly Recurring Revenue, which is the contracted, committed, or predictable revenue stream.
A cohort is a group with a common statistical characteristic. While a cohort could be a common price band, geography, or other dimension, in popular subscription metric analysis, it typically refers to a group of customers or contracts that begin in the same period, usually in the same month or quarter.
In the graphic below, each row represents the MRR that is being contributed by customers acquired in the month (YYYY-MM date format) in the reporting period, which are the columns across the top – July 2012 through June 2013.
Through examination of the rows, you can determine if customers acquired at that time, subject to the same level of product maturity, customer support, on-boarding, pricing & packaging, are growing in MRR contrition or shrinking relative to customers from other cohorts. This enables you to correlate performance with marketing actions, sales plans, pricing, and support policies in effect at the time, with the goal to determine the best business practices and processes to maximize the revenue contributions of customers.