How To Calculate Net Revenue Retention in FinancialForce | Arithmix

Learn how to accurately calculate net revenue retention in FinancialForce with our step-by-step guide. Maximize your revenue growth and optimize your financial strategies with this essential tool.

Calculating net revenue retention is a crucial metric for any business that wants to understand its financial health. It helps you determine how much revenue you are retaining from existing customers, which is an important indicator of customer loyalty and satisfaction. In this article, we will discuss what net revenue retention is, when it is valuable to calculate it, and how to calculate it in FinancialForce.

What Is Net Revenue Retention?

Net revenue retention is a metric that measures the amount of revenue a business retains from its existing customers over a given period. It takes into account the revenue lost from customers who churned or cancelled their subscriptions, 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 from Existing Customers at End of Period - Revenue from Churned Customers) / Revenue from Existing Customers at Start of Period x 100

For example, if a business had \$1 million in revenue from existing 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 revenue retention rate would be:

Net Revenue Retention = (\$1.2 million - \$200,000) / \$1 million x 100 = 100%

This means that the business retained all of its revenue from existing customers and even gained some additional revenue through upsells and cross-sells.

When Is It Valuable To Calculate Net Revenue Retention?

Calculating net revenue retention is valuable for businesses that rely heavily on recurring revenue from subscriptions or contracts. It helps you understand how much revenue you are retaining from existing customers, which is important for predicting future revenue and growth. It also helps you identify areas where you may be losing revenue and take steps to address those issues.

Net revenue retention is particularly valuable for businesses that have a high customer acquisition cost or a long sales cycle. These businesses need to focus on retaining existing customers to maximize their return on investment and reduce their reliance on new customer acquisition.

How to Calculate Net Revenue Retention in FinancialForce

Calculating net revenue retention in FinancialForce is relatively straightforward. You will need to gather data on your revenue from existing customers at the start and end of a given period, as well as the revenue lost from churned customers. You can then use the formula outlined above to calculate your net revenue retention rate.

FinancialForce also offers a variety of reporting and analytics tools that can help you track your net revenue retention over time and identify trends or areas for improvement. These tools can be customized to your specific business needs and can provide valuable insights into your customer retention and revenue growth.

Overall, calculating net revenue retention is an important metric for any business that wants to understand its financial health and customer loyalty. By following the steps outlined above, you can easily calculate your net revenue retention rate in FinancialForce and use that information to make informed decisions about your business strategy and growth.

How Do You Calculate Net Revenue Retention in FinancialForce

FinancialForce 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 FinancialForce 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 FinancialForce, 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.