How To Calculate Net Revenue Retention in Freshsales | Arithmix

Calculating net revenue retention is an important metric for any business. It helps you understand how much revenue you are retaining from your existing customers over a given period of time. In this article, we will discuss what net revenue retention is, when it is valuable to calculate it, and how to calculate it.

What Is Net Revenue Retention?

Net revenue retention is a metric that measures the revenue retained from existing customers over a given period of time. It takes into account the revenue lost from customers who churned, as well as the revenue gained from upsells and cross-sells to existing customers.

Net revenue retention is calculated by taking the total revenue from existing customers at the end of a period, and dividing it by the total revenue from those same customers at the beginning of the period. This gives you a percentage that represents the net revenue retained from those customers.

For example, if you had $100,000 in revenue from existing customers at the beginning of the year, and $120,000 in revenue from those same customers at the end of the year, your net revenue retention would be 120%.

When Is It Valuable To Calculate Net Revenue Retention?

Calculating net revenue retention is valuable for any business that relies on recurring revenue from customers. It helps you understand how much revenue you are retaining from your existing customer base, and can help you identify areas where you can improve customer retention and increase revenue.

Net revenue retention is particularly valuable for SaaS businesses, where customer retention is critical to long-term success. By tracking net revenue retention, you can identify which customers are at risk of churning, and take steps to prevent it. You can also identify which customers are most likely to upgrade or purchase additional products, and focus your sales efforts on those customers.

How To Calculate Net Revenue Retention

Calculating net revenue retention is a straightforward process. First, you need to determine the total revenue from existing customers at the beginning of the period you are measuring. This can be done by looking at your financial records and identifying the revenue generated by each customer during that period.

Next, you need to determine the total revenue from those same customers at the end of the period. Again, this can be done by looking at your financial records and identifying the revenue generated by each customer during that period.

Finally, you divide the total revenue from the end of the period by the total revenue from the beginning of the period, and multiply by 100 to get a percentage. This percentage represents your net revenue retention for that period.

It is important to note that net revenue retention can be influenced by factors other than customer retention and upsells. For example, changes in pricing or product offerings can also impact net revenue retention. Therefore, it is important to consider these factors when interpreting your net revenue retention metric.

In conclusion, net revenue retention is a valuable metric for any business that relies on recurring revenue from customers. By tracking net revenue retention, you can identify areas where you can improve customer retention and increase revenue, and focus your sales efforts on the customers most likely to upgrade or purchase additional products.

How Do You Calculate Net Revenue Retention in Freshsales

Freshsales 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 Freshsales 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 Freshsales, 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 Freshsales 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 Freshsales 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.