How To Calculate Annual Recurring Revenue Cohort Analysis in PeopleSoft | Arithmix

Annual Recurring Revenue (ARR) Cohort Analysis is a powerful tool that helps businesses understand the revenue generated by a specific group of customers over time. By analyzing the revenue generated by customers who joined at the same time, businesses can identify trends and patterns that can inform their marketing, sales, and retention strategies. In this article, we will explore what ARR Cohort Analysis is, when it is valuable to calculate it, and how to do it in PeopleSoft.

What Is Annual Recurring Revenue Cohort Analysis?

Annual Recurring Revenue Cohort Analysis is a method of analyzing revenue generated by a specific group of customers over time. The group of customers is defined by the time they joined the business, and the analysis is done over a specific period, usually a year. The analysis helps businesses understand how much revenue is generated by each cohort, how quickly the revenue grows or declines over time, and how long customers stay with the business.

ARR Cohort Analysis is particularly useful for subscription-based businesses, where customers pay a recurring fee for a product or service. By analyzing the revenue generated by each cohort, businesses can identify which cohorts are the most valuable, which ones are growing or declining, and which ones need attention to improve retention and revenue.

When Is It Valuable To Calculate Annual Recurring Revenue Cohort Analysis?

ARR Cohort Analysis is valuable for any business that has a subscription-based model or relies on recurring revenue. By analyzing the revenue generated by each cohort, businesses can identify trends and patterns that can inform their marketing, sales, and retention strategies. Here are some examples of when ARR Cohort Analysis is valuable:

• A SaaS business wants to identify which cohorts are the most valuable and which ones need attention to improve retention and revenue.
• A subscription-based e-commerce business wants to understand how long customers stay with the business and how much revenue each cohort generates.
• A media company wants to analyze the revenue generated by each cohort of subscribers to its online content.

How to Calculate Annual Recurring Revenue Cohort Analysis in PeopleSoft

Calculating ARR Cohort Analysis in PeopleSoft requires a few steps:

1. Define the cohorts: Define the cohorts based on the time the customers joined the business. For example, you could define cohorts based on the month or quarter the customers joined.
2. Calculate the revenue: Calculate the revenue generated by each cohort over a specific period, usually a year. This can be done using PeopleSoft's reporting tools.
3. Analyze the data: Analyze the data to identify trends and patterns. Look for cohorts that are the most valuable, growing or declining, and in need of attention to improve retention and revenue.
4. Take action: Use the insights gained from the analysis to inform your marketing, sales, and retention strategies. For example, you could offer promotions to cohorts that are declining or invest in improving the customer experience for cohorts that are the most valuable.

By following these steps, businesses can use PeopleSoft to calculate ARR Cohort Analysis and gain valuable insights into their revenue and customer retention.

How Do You Calculate Annual Recurring Revenue Cohort Analysis in PeopleSoft

PeopleSoft itself isn’t naturally geared towards letting you calculate complex metrics like Annual Recurring Revenue Cohort Analysis. As an alternative, teams typically use products like Arithmix to import data from PeopleSoft and build out dashboards.

What is Arithmix?

Arithmix is the next generation spreadsheet - a collaborative, web-based platform for working with numbers that’s powerful yet easy to use. With Arithmix you can import data from systems like PeopleSoft, combine it with data from other systems, and create calculations like Annual Recurring Revenue Cohort Analysis.

In Arithmix, data is organized into Tables and referenced by name, not by cell location like a spreadsheet, simplifying calculation creation. Data and calculations can be shared with others and re-used like building blocks, vastly streamlining analysis, model building, and reporting in a highly scalable and easy to maintain platform. Data can be edited, categorized (by dimensions) and freely pivoted. Calculations are automatically copied across a dimension - eliminating copy and paste of formulas.

Arithmix is fully collaborative, giving your entire team access to your numbers and the ability to work together seamlessly.

Calculating Annual Recurring Revenue Cohort Analysis in Arithmix

Calculating metrics like Annual Recurring Revenue Cohort Analysis is simple in Arithmix. Once you've created your free account, you’ll be able to import your PeopleSoft data, and use it to create natural language formulas for metrics like Annual Recurring Revenue Cohort Analysis.

Arithmix is designed to give you the power to build any calculations you want on top of your PeopleSoft data, while also being easy to use and collaborate on. You can share your dashboards with users inside and outside of your organisation, making it easy to empower your whole team.