How To Calculate ARR by Cohort in Marketo | Arithmix

Calculating ARR (Annual Recurring Revenue) by cohort is an important metric for any business that relies on recurring revenue. It allows you to track the revenue generated by a specific group of customers over time, which can help you identify trends and patterns in customer behavior. In this article, we'll explore what ARR by cohort is, why it's valuable, and how you can calculate it using Marketo.

What Is ARR by Cohort?

ARR by cohort is a way of measuring the revenue generated by a specific group of customers over time. A cohort is a group of customers who share a common characteristic, such as the month they signed up for your service or the marketing campaign that brought them to your website. By tracking the revenue generated by each cohort over time, you can see how their behavior changes and how much revenue they generate for your business.

For example, let's say you run a subscription-based business that offers a monthly service. You might create cohorts based on the month that customers signed up for your service. By tracking the revenue generated by each cohort over time, you can see how much revenue is generated by customers who signed up in January, February, March, and so on. This can help you identify trends in customer behavior, such as whether customers who sign up in January tend to stay subscribed longer than customers who sign up in later months.

When Is It Valuable To Calculate ARR by Cohort?

Calculating ARR by cohort is valuable for any business that relies on recurring revenue. It can help you identify trends in customer behavior and make data-driven decisions about how to improve your business. Here are a few examples of when it might be valuable to calculate ARR by cohort:

• When you're trying to improve customer retention: By tracking the revenue generated by each cohort over time, you can see which cohorts are more likely to stay subscribed to your service. This can help you identify factors that contribute to customer retention and make changes to your business to improve retention rates.
• When you're trying to optimize your marketing campaigns: By creating cohorts based on the marketing campaigns that brought customers to your website, you can see which campaigns are generating the most revenue over time. This can help you identify which campaigns are most effective and allocate your marketing budget accordingly.
• When you're trying to forecast revenue: By tracking the revenue generated by each cohort over time, you can make more accurate forecasts about how much revenue your business will generate in the future. This can help you make better decisions about how to allocate resources and plan for growth.

Overall, calculating ARR by cohort is a valuable tool for any business that relies on recurring revenue. By tracking the revenue generated by specific groups of customers over time, you can identify trends and patterns in customer behavior and make data-driven decisions about how to improve your business.

How Do You Calculate ARR by Cohort in Marketo

Marketo itself isn't naturally geared towards letting you calculate complex metrics like ARR by Cohort. As an alternative, teams typically use products like Arithmix to import data from Marketo and build out dashboards.

What is Arithmix?

Arithmix is the next generation spreadsheet - a collaborative, web-based platform for working with numbers you'll powerful yet easy to use. With Arithmix you can import data from systems like Marketo, combine it with data from other systems, and create calculations like ARR by Cohort.

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 ARR by Cohort in Arithmix

Calculating metrics like ARR by Cohort is simple in Arithmix. Once you've created your free account, you'll be able to import your Marketo data, and use it to create natural language formulas for metrics like ARR by Cohort.

Arithmix is designed to give you the power to build any calculations you want on top of your Marketo 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.