Glossary
Cohort Retention
Tracking how a specific group of customers (a cohort) behaves over time — the foundation of most SaaS and consumer health metrics.
By Amit Tyagi, Fitoor Capital · AletheiaAI Glossary
Definition
Cohort Retention tracks how a defined group of customers (acquired in the same month, quarter, or under similar conditions) behaves over time — how many remain active, how their spend evolves, and what drives departures.
A cohort retention curve plots % of cohort still active (or % of original revenue retained) on the Y-axis against months since acquisition on the X-axis. Healthy SaaS cohorts have flat-or-rising tails (NRR >100% by month 12); declining tails signal underlying product/market fit issues even when topline ARR grows.
India Context
Cohort retention is the metric Indian VCs ask for after the headline ARR conversation. A startup with ₹2Cr ARR can be a great Series A candidate or a poor one depending entirely on cohort retention shape. Indian investors specifically request: monthly cohort retention curves by quarter of acquisition, plus an explanation of any anomalies.
Indian consumer/D2C cohort retention bench: 30%+ at month 6 is good for high-value categories; under 20% by month 6 signals weak product-market fit.
Example
A vertical SaaS Q1 2024 cohort: 50 customers paying ₹5L ARR each = ₹2.5Cr cohort. By month 12: 45 customers still active (5 churned), 25 expanded by 25% on average. Cohort retention by revenue: ₹(45 × 5L) + (25 × 5L × 25% expansion) = ₹2.56Cr / ₹2.5Cr = 102% revenue retention at month 12.
Frequently Asked Questions
Related Terms
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