How To Calculate Net Revenue Retention in SAP Business One | Arithmix

Calculating net revenue retention is a crucial metric for any business that wants to understand its growth and revenue potential. It allows you to determine how much revenue you are retaining from your existing customers, which is essential for forecasting future revenue and identifying areas where you can improve customer retention. In this article, we will discuss how to calculate net revenue retention and why it is valuable for your business.

What Is Net Revenue Retention?

Net revenue retention is a metric that measures the percentage of revenue that a business retains from its existing customers over a specific period. It takes into account the revenue lost due to customer churn, upgrades, and downgrades. The formula for calculating net revenue retention is:

Net Revenue Retention = (Current Period Revenue - Churned Revenue - Downgraded Revenue + Upgraded Revenue) / Previous Period Revenue x 100

For example, if your business had $100,000 in revenue from existing customers in the previous period and $110,000 in the current period, but lost $5,000 due to churn and downgrades and gained $10,000 from upgrades, your net revenue retention would be:

Net Revenue Retention = ($110,000 - $5,000 - $5,000 + $10,000) / $100,000 x 100 = 110%

This means that your business retained 110% of the revenue from existing customers in the current period compared to the previous period.

When Is It Valuable To Calculate Net Revenue Retention?

Calculating net revenue retention is valuable for businesses of all sizes and industries. It allows you to identify areas where you can improve customer retention and increase revenue. Here are some scenarios where calculating net revenue retention is particularly valuable:

• When you want to forecast future revenue: Net revenue retention helps you predict how much revenue you can expect from existing customers in the future. This is important for budgeting and planning purposes.
• When you want to identify areas for improvement: If your net revenue retention is low, it may indicate that you need to improve your customer retention strategies or address customer concerns.
• When you want to measure the success of your customer retention efforts: Calculating net revenue retention over time allows you to track the success of your customer retention efforts and make adjustments as needed.

Overall, net revenue retention is a valuable metric for any business that wants to understand its growth potential and improve customer retention. By following the formula outlined in this article, you can calculate net revenue retention and use it to make data-driven decisions for your business.

How Do You Calculate Net Revenue Retention in SAP Business One

SAP Business One 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 SAP Business One 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 SAP Business One, 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 SAP Business One 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 SAP Business One 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.