How To Calculate Net Dollar Retention in Netsuite | Arithmix
Learn how to calculate net dollar retention in Netsuite with our comprehensive guide. Discover the key metrics and formulas you need to know to accurately measure your business's revenue growth and customer retention rate.
Calculating net dollar retention in Netsuite is a valuable tool for businesses looking to understand the health of their customer base. By analyzing how much revenue is retained from existing customers, businesses can identify areas for growth and improvement. In this article, we will explain what net dollar retention is, when it is valuable to calculate, and how to calculate it in Netsuite.
What Is Net Dollar Retention?
Net dollar retention is a metric used to measure the revenue retained from existing customers over a given period of time. It takes into account the revenue lost from churned customers and the revenue gained from upsells and expansions. The formula for calculating net dollar retention is:
(Revenue from Current Customers at End of Period - Revenue from Churned Customers) / Revenue from Current Customers at Start of Period
For example, if a business had $1 million in revenue from current customers at the start of the year, and $1.2 million at the end of the year, but lost $200,000 in revenue from churned customers, the net dollar retention rate would be:
($1.2 million - $200,000) / $1 million = 1.0 or 100%
This means that the business retained 100% of its revenue from existing customers over the course of the year.
When Is It Valuable To Calculate Net Dollar Retention?
Calculating net dollar retention is valuable for businesses that rely heavily on recurring revenue from existing customers. It can help identify areas of weakness in customer retention and highlight opportunities for growth through upsells and expansions. By tracking net dollar retention over time, businesses can also measure the effectiveness of their customer retention strategies and make data-driven decisions to improve customer satisfaction.
Net dollar retention is particularly useful for subscription-based businesses, SaaS companies, and other businesses with a high customer lifetime value. It can also be valuable for businesses that are looking to expand their customer base and want to ensure that they are retaining existing customers while acquiring new ones.
How To Calculate Net Dollar Retention in Netsuite
To calculate net dollar retention in Netsuite, you will need to gather data on your revenue from current customers at the start and end of a given period, as well as the revenue lost from churned customers. This data can be found in your Netsuite account by running a revenue report for the desired time period.
Once you have this data, you can use the formula mentioned earlier to calculate your net dollar retention rate. You can also use Netsuite's SuiteAnalytics tool to create custom reports and dashboards to track net dollar retention over time and identify trends.
It is important to note that while Netsuite can provide valuable data for calculating net dollar retention, it is not the only tool available. Businesses should also consider using customer relationship management (CRM) software, customer feedback surveys, and other tools to gather insights into customer satisfaction and retention.
In conclusion, calculating net dollar retention in Netsuite is a valuable tool for businesses looking to understand the health of their customer base. By analyzing how much revenue is retained from existing customers, businesses can identify areas for growth and improvement. By following the steps outlined in this article, businesses can easily calculate their net dollar retention rate and use this information to make data-driven decisions to improve customer satisfaction and retention.
How Do You Calculate Net Dollar Retention in Netsuite
Netsuite itself isn’t naturally geared towards letting you calculate complex metrics like Net Dollar Retention. As an alternative, teams typically use products like Arithmix to import data from Netsuite 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 Netsuite, combine it with data from other systems, and create calculations like Net Dollar Retention.
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 Net Dollar Retention in Arithmix
Calculating metrics like Net Dollar Retention is simple in Arithmix. Once you've created your free account, you’ll be able to import your Netsuite data, and use it to create natural language formulas for metrics like Net Dollar Retention.
Arithmix is designed to give you the power to build any calculations you want on top of your Netsuite 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.Use Arithmix free