How To Calculate Net Revenue Retention in Drift | Arithmix
Learn how to calculate net revenue retention in Drift and improve your understanding of your company's revenue growth. This article provides step-by-step instructions and insights to help you measure the effectiveness of your customer retention strategies.
Calculating net revenue retention is an important metric for any business looking to measure the success of their customer retention efforts. This metric helps businesses understand how much revenue they are retaining from their existing customer base, and how much they are losing to churn. In this article, we will discuss what net revenue retention is, why it is valuable to calculate, and how to calculate it.
What Is Net Revenue Retention?
Net revenue retention is a metric that measures the amount of revenue a business retains from its existing customer base over a given period of time. It takes into account the revenue lost due to customer churn, as well as the revenue gained from upsells and cross-sells to existing customers. The formula for calculating net revenue retention is:
Net Revenue Retention = (Revenue at the end of the period - Revenue lost due to churn) / Revenue at the beginning of the period x 100
For example, if a business had $1 million in revenue at the beginning of the year, lost $100,000 due to churn, but gained $200,000 from upsells and cross-sells, their net revenue retention would be:
Net Revenue Retention = ($1,100,000 - $100,000) / $1,000,000 x 100 = 110%
This means that the business retained 110% of its revenue from its existing customer base over the course of the year.
When Is It Valuable To Calculate Net Revenue Retention?
Calculating net revenue retention is valuable for any business that wants to understand the health of its customer base and the effectiveness of its customer retention efforts. It can help businesses identify areas where they are losing revenue due to churn, as well as opportunities for upselling and cross-selling to existing customers.
Net revenue retention is particularly valuable for businesses with a subscription-based model, where customer retention is critical to long-term success. By tracking net revenue retention over time, businesses can identify trends and make adjustments to their retention strategies as needed.
Overall, net revenue retention is a powerful metric that can help businesses understand the health of their customer base and make data-driven decisions to improve customer retention and drive revenue growth.
How Do You Calculate Net Revenue Retention in Drift
Drift itself isn’t naturally geared towards letting you calculate complex metrics like Net Revenue Retention. As an alternative, teams typically use products like Arithmix to import data from Drift 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 Drift, combine it with data from other systems, and create calculations like Net Revenue 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 Revenue Retention in Arithmix
Calculating metrics like Net Revenue Retention is simple in Arithmix. Once you've created your free account, you’ll be able to import your Drift data, and use it to create natural language formulas for metrics like Net Revenue Retention.
Arithmix is designed to give you the power to build any calculations you want on top of your Drift 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