Understanding Retention

by Neel Desai

MRR Loss Rate measures the amount of change in MRR from your existing customer base due to downgrades and churn in a given month. At the end of June, if you have $100 in MRR, $100 can be expected to be brought in. However, this number can be lower than $100 — MRR Loss Rate reflects the negative shift in revenue due to downgraded and churn customers. The companion metric for MRR Loss Rate is MRR Gain Rate, which reflects postive shifts due to upgrades.

Revenue and Customer Retention will give you and your team important feedback on your product and profitability. 

Retained revenue: 

Retained revenue measures the change in revenue and customer count of your beginning-of-month existing customer base. That is, if you have $100 in MRR at the end of June, in a perfect world, you would renew $100 in July. The reason this value could be less than $100 or greater than $100 is due to upgrades, downgrades and churn.

 If you lose more revenue in churn and downgrades than your existing customers upgrade, this will go down. Alternatively, if you bring in more in upgraded revenue than in churn and downgrades for your existing customer base, this will go up.

MRR Gain Rate: 

MRR Gain Rate measures the amount of change in MRR from your existing customer base due to upgrades in a given month. At the end of June, if you have $100 in MRR, $100 can be expected to be brought in. However, this number can be greater than $100 — MRR Gain Rate reflects the positive shift in revenue due to upgraded customers.The companion metric for MRR Gain Rate is MRR Loss Rate, which reflects negative shifts due to churn and downgrades.

MRR Loss Rate:

MRR Loss Rate measures the amount of change in MRR from your existing customer base due to downgrades and churn in a given month. At the end of June, if you have $100 in MRR, $100 can be expected to be brought in. However, this number can be lower than $100 — MRR Loss Rate reflects the negative shift in revenue due to downgraded and churn customers. The companion metric for MRR Loss Rate is MRR Gain Rate, which reflects positive shifts due to upgrades.


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