The most misused term in marketing: COHORTS!

Are we using the term "cohorts" because it's appropriate or simply because it sounds cool? These days, it is too fancy to use cohorts everywhere, including education, startups, marketing, and consumer research.

In my role as a CEO, I work with many marketers, and almost every week, I hear the word cohort being used. But more often than not, it’s misused.

These terms may seem interchangeable, but they serve very different purposes. However, I frequently notice that many marketers ask questions such as, “What cohort are we targeting this Women’s Day?” when they actually intend to refer to something else.

This mix-up isn’t just a minor wording issue. Most marketers often use the words "cohort" and "segment" interchangeably, but they mean different things. A segment is a group of people with similar characteristics at a given point.

A cohort, on the other hand, is a group of people who share a common experience within a specific timeframe and are tracked over time.

For example:

• Segment: Women aged 18-24 today
• Cohort: Women born in the year 2000

What is a cohort?

A cohort is a group of people who share a common event within a defined period.

For example, women born in 1985 form a birth cohort. Similarly, students who graduated in 2010, employees who joined a company in 2020, or customers who made their first purchase in Q1 2023 are all examples of cohorts.

Why cohorts matter?

Cohort analysis is important because it helps us track consumer behaviour over time. A longitudinal study follows a group of people over a period to understand patterns and trends.

The longest study on happiness, conducted over 80 years, tracked the same group of people to see how life experiences shaped their well-being. Similarly, in marketing, tracking cohorts over time helps businesses understand repeat purchase rates, retention trends, and customer lifetime value.

By studying cohorts instead of just segments, businesses can make better decisions, predict trends, and create stronger marketing strategies.

Think about this:

• People born during the COVID-19 pandemic will have unique life experiences that shape their perspectives.
• Those who graduated during COVID-19 faced different career challenges compared to those who graduated in 2015.

Types of cohorts

Cohorts are grouped based on shared experiences within a specific timeframe. There are two primary types:

Time-based cohorts
These cohorts consist of people who take a specific action at the same time. Longitudinal studies widely use these cohorts to track changes in behaviour over time.

Examples:

• First-time buyers in January 2024 – Helps analyse how many return for repeat purchases.
• Customers who signed up for a subscription in Q1 2023 – Useful for tracking churn rates and lifetime value (LTV).
• Students who graduated in 2020 – A study could track how the pandemic affected their career growth.
• People born in 1990 – A birth cohort used in social research to understand generational trends.

Behaviour-based cohorts

These cohorts are grouped by similar interactions with a brand, regardless of when they occurred. They are useful for understanding customer engagement, product usage, and conversion trends.

Examples:

• Customers who used a discount code on their first purchase – Helps assess if discounts drive long-term loyalty or one-time purchases.
• Users who abandoned their cart but returned within seven days – Useful for retargeting strategies.
• Customers who subscribed to a brand’s newsletter but never made a purchase – Can be nurtured with targeted email campaigns.
• App users who completed a free trial but didn’t upgrade to premium – Helps improve conversion strategies.

What is a segment?

A segment, on the other hand, is a group of people with shared characteristics who are expected to respond to a common action. Unlike cohorts, segments are not bound by time.

Each segment is defined by shared attributes that make them relevant for targeted campaigns, but they do not necessarily share a common starting point in time.

For example, a segment could be:

Why do segments matter?

Segments matter because they allow businesses to group customers based on shared characteristics and target them with personalized messaging, offers, and experiences.

Unlike cohorts, which focus on long-term behavioural trends, segmentation helps brands drive immediate impact by tailoring marketing campaigns, product recommendations, and customer interactions.

Cohorts vs segments: The key differences

To understand the difference between a cohort and a segment in a real-world marketing scenario, let’s consider a Valentine’s Day sale or a Women’s Day campaign.

If a brand decides to run a targeted campaign for "women aged 25-35", it is using segmentation. This segment consists of all women in this age range, regardless of when they became customers or how they have interacted with the brand in the past.

The targeting is based on shared demographic characteristics rather than time-bound behaviour. Moreover, 99% of the time, when running campaigns, we target segments, not cohorts.

However, if the brand analyses "women who made their first purchase on Women’s Day last year", that is a cohort.

Tracking this cohort allows the brand to study their shopping behaviour over time, assess their likelihood of making repeat purchases, and design re-engagement strategies.

Not all segments are cohorts; all cohorts are a type of segment.

Final words

Cohorts help you analyse long-term trends. Segments help you take action right now.

So, the next time someone says "cohort," take a moment to ask – are we talking about a cohort or a segment?

(Our guest author, Saurabh Agrawal, is the CEO of DAiOM, a consulting firm helping brands grow omni-channel with the use of analytics and growth marketing. In the past, has worked in CXO roles with American Express, Lenskart, and Tata Group.)