How To Calculate Net Revenue Retention in Kinetic | Arithmix

Calculating net revenue retention is an important metric for any business, as it helps to determine how much revenue is being retained from existing customers. This is particularly important for businesses that rely heavily on recurring revenue, such as subscription-based businesses. In this article, we will discuss what net revenue retention is, when it is valuable to calculate it, and how to calculate it in Kinetic.

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 of time. It takes into account the revenue lost from customers who have churned (i.e., stopped using the product or service) as well as the revenue gained from customers who have expanded their usage of the product or service. 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

For example, if a business had $100,000 in revenue from existing customers at the start of the year, and $80,000 in revenue from those same customers at the end of the year, but also lost $10,000 in revenue from churned customers, the net revenue retention rate would be:

Net Revenue Retention = ($80,000 - $10,000) / $100,000 = 0.7 or 70%

When Is It Valuable To Calculate Net Revenue Retention?

Calculating net revenue retention is valuable for businesses that rely heavily on recurring revenue, such as subscription-based businesses. It helps to identify how much revenue is being retained from existing customers, which can be used to predict future revenue growth. It also helps to identify areas where the business may be losing revenue, such as through customer churn, and can be used to develop strategies to reduce churn and increase revenue retention.

How to Calculate Net Revenue Retention in Kinetic

To calculate net revenue retention in Kinetic, you will need to gather data on revenue from existing customers at the start and end of a given period, as well as data on revenue lost from churned customers. This data can be found in Kinetic's customer relationship management (CRM) software.

Once you have this data, you can use the formula mentioned earlier to calculate net revenue retention. Kinetic also offers reporting tools that can help you visualize and analyze your net revenue retention rate over time, as well as identify trends and areas for improvement.

Overall, calculating net revenue retention is an important metric for any business that relies on recurring revenue. By understanding how much revenue is being retained from existing customers, businesses can develop strategies to reduce churn and increase revenue retention, ultimately leading to long-term growth and success.

How Do You Calculate Net Revenue Retention in Kinetic

Kinetic 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 Kinetic 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 Kinetic, 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 Kinetic 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 Kinetic 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.