Once you’ve set up actuals for your cohorts, the next step is forecasting. Abacum makes it easy to project new customers, retention rates, and renewals so you can see how customer behavior evolves over time. With dynamic assumptions and flexible formulas, your cohort forecasts stay realistic, transparent, and tied to business strategy.
With Abacum, you can:
Forecast new customers and renewals using assumptions or historical patterns.
Project retention rates dynamically with flexible models that adapt over time.
Build a complete customer outlook by combining new, renewal, and retained customers into one forecasted view.
Step-by-Step Guide to Creating Forecast Cohorts
1. Forecast New Customer Acquisition
Apply strategic growth assumptions (such as a 1% monthly increase in new customers) to project future customer cohorts accurately. Build operational flexibility by making growth rates adjustable variables that can be modified based on market conditions, marketing spend, or seasonal trends.
Best Practice: Link growth assumptions to your customer acquisition cost (CAC) and marketing budget forecasts for more realistic projections.
2. Project Customer Retention Patterns
Leverage historical data from past cohorts to estimate future retention rates, or develop dynamic assumptions for modeling long-term customer drop-offs. Use cohort analysis to identify retention trends and apply these insights to your forecast cohorts.
Key Consideration: Account for different retention patterns across customer segments, subscription tiers, or acquisition channels.
3. Adjust Retention Rates Over Time
Model long-term customer retention behavior by incorporating realistic assumptions (such as a 10% monthly churn rate beyond a specific period). Maintain forecasting flexibility by using assumption variables that can be easily adjusted as you gather more customer data.
Advanced Tip: Consider implementing different retention curves for various customer segments to improve forecast accuracy.
4. Forecast Customer Renewals
Create distinct forecasting logic that differentiates between new customer acquisition and existing customer renewals. Ensure renewal calculations only apply beyond the initial contract period of each cohort to maintain forecast integrity.
Important: Align renewal forecasts with your contract terms, pricing changes, and customer success initiatives.
5. Calculate Total Customer Forecasts
Combine new customer projections and renewal forecasts to create a comprehensive view of your future customer cohorts. This integrated approach provides finance teams with complete visibility into expected customer growth and revenue potential.
Output: Generate cohort-based forecasts that support strategic planning, budgeting, and investor reporting requirements.
TL;DR |
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Abacum's dynamic forecasting capabilities ensure your cohort models remain accurate, flexible, and aligned with evolving market conditions. The combination of data-driven assumptions and scenario-based modeling empowers finance teams to deliver comprehensive customer outlooks that drive growth and optimize resource allocation. |
Want to keep learning how to use Cohorts in Abacum? This is the second video of a series of 3: