MA.8:5.1 - Keep acquisition and cohort continuation distinct
A constructed subscription cohort acquires 100 customers at 20 each, paid initially: 2,000. The scenario assumes 80% renewal into each next month, and 10 of receipt less relevant service payments per active customer per month. Its three-month account is:
| Month | Active customers under the scenario | Period net service flow |
|---|---|---|
| 1 | 100 | 1,000 |
| 2 | 80 | 800 |
| 3 | 64 | 640 |
The three-month service total is 2,440, leaving 440 after acquisition spending on this undiscounted basis. These are conditional flows, with no other changing flows under the supplied scenario. This account omits flows after month 3.
Before month 2, the original acquisition payment is already spent. Count the original 2,000 once in the cumulative account. Compare continuation with stopping using the future flows that change and the applicable obligations.
Suppose a proposed new cohort costs 35 per customer to acquire, contributes only 6 per active customer per month and has a supplied 60% monthly renewal scenario. Its corresponding three-month service flow is 600 + 360 + 216 = 1,176 against 3,500 acquisition, leaving −2,324 on the same limited basis. Copying the earlier cohort’s ratio would conceal the changed expansion conditions.