How To Calculate Net Revenue Retention in MultiView | Arithmix

Calculating net revenue retention is an important metric for any business looking to measure the success of its customer retention efforts. It helps to determine the percentage of revenue retained from existing customers over a specific period of time, after accounting for any lost revenue due to customer churn or downgrades. In this article, we will explore 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 measure of the revenue generated from existing customers over a specific period of time, after accounting for any lost revenue due to customer churn or downgrades. It is calculated by dividing the total revenue generated from existing customers at the end of the period by the total revenue generated from those same customers at the beginning of the period. The resulting percentage represents the net revenue retention rate.

For example, if a company had $1 million in revenue from existing customers at the beginning of the year and $1.2 million in revenue from those same customers at the end of the year, the net revenue retention rate 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 existing customers. It provides insight into the effectiveness of customer retention efforts and can help identify areas for improvement. A high net revenue retention rate indicates that customers are staying with the company and potentially expanding their usage or purchasing additional products or services.

On the other hand, a low net revenue retention rate may indicate issues with customer satisfaction, product or service quality, or competition. By tracking net revenue retention over time, businesses can identify trends and make data-driven decisions to improve customer retention and drive revenue growth.

How to Calculate Net Revenue Retention

To calculate net revenue retention, follow these steps:

1. Determine the total revenue generated from existing customers at the beginning of the period.
2. Determine the total revenue generated from those same customers at the end of the period.
3. Subtract any lost revenue due to customer churn or downgrades during the period.
4. Divide the resulting revenue by the total revenue generated from existing customers at the beginning of the period.
5. Multiply the resulting percentage by 100 to get the net revenue retention rate.

It is important to note that net revenue retention should be calculated over a consistent period of time, such as a quarter or a year, to accurately measure trends and identify areas for improvement.

In conclusion, calculating net revenue retention is a valuable metric for any business looking to measure the success of its customer retention efforts. By understanding what net revenue retention is, why it is valuable to calculate, and how to calculate it, businesses can make data-driven decisions to improve customer retention and drive revenue growth.

How Do You Calculate Net Revenue Retention in MultiView

MultiView 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 MultiView 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 MultiView, 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 MultiView 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 MultiView 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.