From Cookies to Cohorts - Website Analytics
With reliance on clear cookie data becoming a thing of the past, marketing is going to have to change. Gone are the days when you could identify individuals and small segments of users based on characteristics such as location, browsing activity, interest or even age. Now, cohorts are the new groups, so we need to know how to effectively work with these clusters of users to extract the most marketing value.
First, let's define the difference between segments and cohorts. A segment is a group of customers or website visitors grouped by the characteristics listed above (age, location, browsing history). A segment can be further refined by adding more criteria – it's like a filter on your customers. A cohort, by contrast, is a group linked by sharing an impersonal characteristic, such as the time period in which they accessed your website, the amount of time spent, whether they put something in their shopping basket or even filled out an online enquiry form. Within cohorts you don't know who lives where, or who has an interest in a specific item or area – you can't filter cohorts in the same way you filter segments. A segment will always contain the same users, while a cohort is more fluid, with individuals entering and exiting a cohort over time.
When getting to grips with how cohorts work, a good first step is to look at time based cohorts, starting with a 7 day period of website activity. This 7 day period cohort can start and end on any date, and it is moveable – you can look at any 7 day period in your analytics tool and gain the same insight. Within that 7 day period you can see how many people visited more than once, then how many people took action and how many people abandoned their carts. This creates sub-cohorts of users who take a particular journey and you can learn a lot from seeing the drop off rates from the overall 7 day cohort to those who actually made a purchase within that time frame. Depending on the nature of your business and the length of your buying cycle, you may find tracking a 14 or 30 day cohort more useful.
Cohort based analysis and marketing is the way forward, but it is a big change and means redefining your KPIs. It is much easier to create cohort definitions when you know what it is that you ultimately want to track. In some cases your KPI will only need a small tweak, but those based on deep segmentation may need a complete overhaul. There is still a place for some segmentation in your marketing, but this will now be based solely on data collected from your own website.
You can still infer a segment from your own data based on browsing activity within your own site – for example if you sell camping gear you may identify a particular user (or segment of users) that never looks at walking boots, but instead spends time looking at portable barbecues and camp stoves. You can then infer that this segment of users isn't interested in walking or hiking, but might be in the market for picnic sets, camping chairs and tables for days out. This type of grouping can be referred to as a cohort or as a segment, but you will find that not everyone in this segment is in the same cohort and vice versa – it is a very niche way of grouping users.
This new way of using the data available to online marketers will present some challenges to traditional ways of digital advertising, but at Parua Digital we are ready to help take you from cookies to cohorts and beyond.
