Dynamic Customer Spend and Retention Curves: Excel Model

 This is some of the most useful and widely needed logic for any business. It doesn't matter if you are trying to forecast for a startup or an existing operation. If the nature of your customer base involves highly fluctuating retention patterns and spend patterns, this financial model will be of use. Common applications would be for SaaS, eCommerce, boutique retail.


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Let's say that you acquire new customers over time and those customers spend money for products or services that your business has to offer. Now, lets say that the pattern for how many customers remain over time is not static, but changes in some patter. Also, lets say that the amount of money a customer spends follows a general patter that can't really be defined by a static value, but needs to follow a curve or set of values pegged to the age of a given customer.

Both of the two logic conundrums above can be solved easily with this template. The following data entries need to be made over 60 months and the model does the rest:

  • Customers acquired per month
  • Monthly Retention i.e. 100%, then at age 2 x% and age 3 y% and so.
  • Average customer spend in month 1 to 60 (doesn't have to go all the way to 60)
The monthly retention lets the user define things that would not normally be able to be modeled with a regular retention rate logic. For example, in this, you can plan for the fact that of a given group of customers that were acquired, maybe a bigger percentage of them leave in the first few months and then the rate of loss declines. 

And, for customer spend, maybe they join and spend $x and then spend a little more as they have been a customer for longer and then maybe less before they leave. This can all be defined in whatever patter fits your customer base the best in order to provide a better revenue forecast and better customer count based on expected values.

Screenshots of Template:
customer retention modeling

customer spend modeling 2

customer spend revenue forecasting

spend and retention curve