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ProfitWell Revenue Retention Rate

Revenue Retention Rate measures how much recurring revenue you retain from existing customers over a period of time, after accounting for churn and upgrades/downgrades.

With Databox you can track all your metrics from various data sources in one place.

Revenue Retention Rate 110% Start tracking this metric
  • About
  • Tech details

What Is Revenue Retention Rate

Revenue retention rate, also known as net revenue retention rate (NRR), is a financial metric that measures a company’s ability to retain and grow its revenue from existing customers over a specific period.
It also shows how much the business is generating in additional revenue from upsells, cross-sells, expansions, and renewals within its customer base.
The revenue retention rate is a crucial metric for subscription-based businesses, SaaS companies, and other businesses with recurring revenue models.

How to Calculate Revenue Retention Rate

The revenue retention rate is typically calculated by taking the revenue generated from existing customers at the end of a given period (including upsells, cross-sells, and expansions) and dividing it by the revenue generated from the same group at the beginning of the period.
Then, we multiply the figure by 100 to express it as a percentage.

Here’s an exact formula you can follow:

Revenue Retention Rate = ((Ending Revenue – Expansion Revenue) / Beginning Revenue) * 100

Let’s break down these elements in the formula:

  • Ending revenue is the total revenue generated from existing customers at the end of the period.
  • Expansion revenue represents the additional revenue generated from existing customers during the period, resulting from upsells, cross-sells, and expansions.
  • Beginning revenue is the total revenue generated from the same customer cohort at the beginning of the period.

Suppose you have a SaaS company that offers a subscription service.
At the beginning of the quarter, you had 100 customers generating $100,000 in total revenue.
During the quarter, you had expansion revenue of $20,000 from upsells and cross-sells. At the end of the quarter, you had 90 customers generating $110,000 in total revenue.
Using the formula, we calculate that the revenue retention rate for this company is 90%.

What Is a Good Revenue Retention Rate

Industry-specific factors, business models, customer dynamics, and growth stages all have a huge impact on when determining a good revenue retention rate for a particular company.
A commonly mentioned threshold for a strong revenue retention rate is somewhere above 100%, with the industry playing one of the biggest factors.

For example, SaaS companies typically aim for revenue retention rates in the range of 100% to 130%. This range indicates that the company is not only retaining existing customers, but also generating additional revenue from upsells, cross-sells, and expansions.
On the other hand, professional service firms like consulting or marketing agencies may have a rate ranging from 90% to 110%.

Given the nature of their business and potential project-based work, these companies strive to retain clients and secure additional revenue through project expansions or ongoing contracts.

How to Improve Revenue Retention Rate

A high revenue retention rate indicates customer satisfaction, loyalty, and the ability to generate recurring revenue, and it’s why most businesses prioritize this metric.
To improve your retention rate, you need to come up with strategies that focus on strengthening existing customer relationships and delivering ongoing value.

We spoke to hundreds of industry leaders on the topic and shortlisted some of their go-to strategies:

  • Get Actionable Feedback Using the “Mom Test”: Instead of relying only on direct feedback from customers, do indirect customer voice research by mining forums and online reviews every now and then. This way, you’ll get some new, harsh insights that your customers might be hesitant to tell you – hence, the mom test.
  • Use triage charts to avoid wasting prospects’ time: Efficient customer support is one of the best ways to retain customers. But oftentimes, businesses overlook the importance of expanding their support team as the company grows. This can lead to a lot of “let me connect you to another agent” situations with the support, causing dissatisfaction among customers. To avoid this, you can use triage charts to connect the customer to the right agent immediately and save time for both parties.
  • Reward your oldest customers and let others know they can expect loyalty incentives: Check out which customers have been with you the longest and create some special rewards specifically for that cohort. This prevents brand fatigue and will likely persuade them to continue doing business with you. It’s also a good idea to let new customers know about these special incentives, this can prevent them from leaving if they’re a few weeks or months away from unlocking your loyalty rewards.

More resources to help you improve:

Visualizations

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    Pie Chart

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    Bar and Line Chart

    Used to show comparisons between values.

How to track Revenue Retention Rate in Databox?

Databox is a business analytics software that allows you to track and visualize your most important metrics from any data source in one centralized platform.

To track Revenue Retention Rate using Databox, follow these steps:

  1. 1
    Connect ProfitWell that contains the metric you want to track
  2. 2
    Select the metric you want to track from the list of available metrics
  3. 3
    Drag and drop the selected metric onto your dashboard
  4. 4
    Watch your dashboard populate in seconds
  5. 5
    Put Revenue Retention Rate on the Performance screen
  6. 6
    Get Revenue Retention Rate performance daily with Scorecards or as a weekly digest
  7. 7
    Set Goals to track and improve performance of Revenue Retention Rate
ProfitWell integration with Databox Track Revenue Retention Rate from ProfitWell in Databox GET STARTED

ProfitWell Revenue Retention Rate included in Dashboard Templates 1

  • Live view

    Profitwell SaaS MRR Drilldown for Weekly Monitoring

    Optimize leadership insights with the "SaaS MRR Drilldown for Weekly Monitoring" dashboard. Focused on key revenue metrics like Net New MRR and Net New Customers, it offers simple, numerical visualizations for a comprehensive view of your growth.

    ProfitWell

Basics

  • Description
    Revenue Retention Rate measures how much recurring revenue you retain from existing customers over a period of time, after accounting for churn and upgrades/downgrades.
  • Category
    SaaS
  • Subcategory
    Revenue
  • Default Format
    Percentage
  • Cumulative Support
    No
  • Units
    No
  • Granularities
    monthly
  • Favorable Trend
    increasing
  • Historical Data
    Yes
  • Changing historical data
    No
  • Forecast Support
    Yes
  • Benchmark Support
    Yes
  • Media Support
    No
  • Dimension
    N/A
  • Metric Type
    general Learn more
  • API Endpoint
    https://api.profitwell.com/v2/metrics/{period}

Questions? We've got answers.

  • Why net revenue retention matters

    Net revenue retention matters because it directly impacts the financial health and growth of a business. It provides insight into its ability to retain and expand revenue from existing customers.

  • Is net revenue retention the same as net dollar retention?

    Yes, net revenue retention and net dollar retention refer to the same concept. Both terms are used interchangeably to describe the financial metric that measures a company’s ability to retain and grow revenue from existing customers.

  • Net revenue retention vs. gross revenue retention: What’s the difference?

    The main difference between net and gross revenue retention is in the way they account for revenue generated from existing customers.

    Net revenue retention factors in expansion revenue, which includes upsells, cross-sells, and expansions, while excluding any revenue lost due to churn.

    On the other hand, gross revenue retention solely considers the total revenue generated from existing customers, including both recurring revenue and expansion revenue, without subtracting revenue lost from churn. 

     

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