Segments, Cohorts and Funnels
Segments group entities by attributes. Cohorts align them by a starting event. Funnels follow eligibility through ordered stages. They answer different questions.
Segment without inventing a person
HarborMart may segment orders by store, slot, fulfilment mode and basket size. These are operational groups, not permanent customer “types.”
Good segments are:
- defined before the outcome being compared;
- large enough for useful uncertainty estimates;
- actionable through a distinct decision;
- stable enough to reproduce;
- checked for proxying sensitive attributes.
A cluster label such as “value seeker” is an analyst’s summary, not an observed psychological fact.
Cohort retention
Suppose customer activity is measured from first order:
| First-order cohort | Month 0 | Month 1 | Month 2 | Month 3 |
|---|---|---|---|---|
| January, | 100% | 58% | 45% | 39% |
| February, | 100% | 63% | 49% | — |
| March, | 100% | 60% | — | — |
The blank March cells are not zero; those horizons have not matured. Compare cohorts at the same age. A calendar-month total confounds customer age, acquisition volume and seasonal conditions.
Retention at age is
Define whether “active” means any order, paid order or contribution-positive order, and how account closures or observation-window loss are handled.
Funnel arithmetic
| Stage | Customers | Stage conversion | Entry conversion |
|---|---|---|---|
| eligible visitors | 10,000 | — | 100% |
| product viewed | 7,500 | 75.0% | 75.0% |
| checkout started | 2,400 | 32.0% | 24.0% |
| paid order | 1,920 | 80.0% | 19.2% |
| fulfilled order | 1,824 | 95.0% | 18.24% |
“Checkout conversion” could mean or . Name the denominator.
Funnels require:
- a stable identity across devices;
- ordered event rules;
- a time window;
- treatment of repeats and backtracking;
- consistent eligibility at entry.
Composition can reverse an aggregate
If mobile traffic rises and mobile converts less than desktop, total conversion can fall even when both channel-specific rates improve. That is a composition effect, not necessarily a product deterioration.
Use standardisation when the question is “what would the total rate be under a fixed channel mix?” Report both observed and standardised results; each answers a different question.
Quick check
February’s Month-1 retention exceeds January’s by five points. Can HarborMart attribute the change to a new onboarding message launched in February?