Mastering Cohorts for Better Product Management

In product management, understanding how different groups of users behave is key. One of the most powerful tools for this is the cohort. In simple terms, a cohort is just a group of users, and using cohorts can help you learn more about your product's first-time user experience (FTUX) and overall performance.

Introduction

In this guide, we explore what cohorts are and how you can use them to improve your product. Whether you’re a product manager, designer, or engineer, this guide will help you break down user behavior into actionable insights. You’ll learn to group users by age, location, and more, and then see how these groups can guide product improvements.

What You’ll Learn:

• Defining a cohort and key ways to group users
• Use cases for cohorts in marketing and product analysis
• The importance of the first-time user experience (FTUX)
• How to analyze funnels—using a food delivery app as an example
• Tracking and improving key metrics for product growth

Estimated reading time: 5 minutes

1. Understanding Cohorts

A cohort is a fancy way to say "a group of users." To illustrate, imagine each icon on a screen represents one user. You can group these users based on shared properties. Here are a few common ways to form cohorts:

• By Age: Create groups like 18-24, 25-32, and so on.
• By Location: Group users by zip code or region to target local campaigns.

Note: These groups help tailor marketing efforts and product changes to the needs of each segment.

2. Why Cohorts Matter in Product Management

Understanding the early interactions of new users is one of the most important steps in product management. Many companies put a strong focus on the First-Time User Experience (FTUX). For example:

• Twitter has shown that up to a third of their product team focuses solely on improving FTUX.
• Adobe’s Chief Product Officer, Scott Belsky, emphasizes the importance of the first mile of the user experience.

Breaking down users into cohorts allows you to see who is getting value from your product quickly, and who might be facing friction.

3. Using Cohorts to Improve FTUX

When new users come in, it’s vital to see how they interact with your product. The FTUX helps you understand their journey from downloading your app to realizing its value.

For example, in my last role, we looked at 100 new users to see how many placed an order or booked a gig. If only 6 out of 100 converted, you would have a 6% FTUX conversion rate. This metric pinpoints which part of your initial user experience requires improvement.

You can also split these results by platform—iOS versus Android—to see which one performs better.

4. A Practical Example: The FTUX Funnel for a Food Delivery App

Consider the following step-by-step funnel for a food delivery app’s first order:

1. User opens the app.
2. User views the lobby.
3. User selects the sign-up option.
4. User completes the sign-up process.
5. User enters the delivery address.
6. User views the restaurant’s homepage.
7. User selects a restaurant.
8. User adds an item to the cart.
9. User selects view cart.
10. User proceeds to checkout.
11. User enters credit card information.
12. User places the order.

This funnel maps out every step a user takes. Using cohorts, you can analyze this funnel to see where users drop off. Is the sign-up process too long? Does the checkout feel confusing? Answering these questions can help you remove friction and boost conversion.

5. Analyzing Metrics for Cohorts

Once your cohorts are defined, you can compare metrics across groups. Ask yourself:

• How do users in different age ranges interact with key features?
• Does location affect how users use your service?
• Which steps in the FTUX funnel show the biggest drop-offs?

The answers to these questions guide your next steps in product improvements. By continually monitoring these metrics, you can make data-driven decisions that lead to exponential wins for your product.

Tip: Keep your analyses focused on practical improvements. Even small insights can change the entire game.

Conclusion

Cohorts are a simple yet powerful way to group your users and track their journey through your product. By focusing on the first-time user experience, you can identify friction points and optimize your funnel for better conversion rates.

Remember, understanding how different groups interact with your product is essential for making informed improvements. Whether you are examining age groups, locations, or split by platform, cohorts give you the data needed to drive success.

Up next, we will explore key metrics that can further boost your analysis and product performance. Stay tuned for more insights on using data to drive better product outcomes.