How much more revenue can you earn by improving retention?
For this calculator we are looking only at the revenue from your existing customers. Exclude net new logos, and focus only on your current customer base.
Avoid The 5 Costly Mistakes
That Lead To Customer Churn
Customer churn is the SINGLE biggest blocker to your company’s success. Sure, product issues and front-end sales are important. But if your customers don’t renew their subscriptions, cancel their contracts or otherwise stop doing business with you, hitting your revenue targets becomes much, much harder.
It means every new customer is simply filling the space previously occupied from someone who churned. You’re working really hard to stay in the same place.
On the other hand, when you consistently prevent churn, every new customer delivers upside. Since your old customers are sticking around, the net new folks are additive.
In other words, customer retention is your greatest opportunity for growth.
On this page you’ll find two resources:
- First. a calculator that lets you evaluate your company’s potential for growth with existing customers in real-time. We call it the Projected Recurring Revenue Calculator.
- Next, you’ll learn all about the Five Costly Mistakes That Lead To Customer Churn – and how to avoid them.
Each of these mistakes is linked to information and resources, like more calculators, templates and other resources. Together they walk you through a self-audit so you can see where your company is losing revenue, why it’s happening, and what to do about it.
Let’s begin with a simple calculator.
The calculator below measures how much additional money you’ll make from existing customers by improving customer retention.
There are three inputs for the calculator:
- Current Annual Recurring Revenue (ARR): The amount of money your company derives from continuing (ie subscription) revenue each year.
- Current Net Revenue Retention (NRRc): The cumulative percentage of revenue you keep from your existing customers over a given period of time (in this case, a year). NRRc includes upsells, downsells and churned customers.
- Goal Net Revenue Retention (NRRg): The NRRg percentage you hope to achieve once you improve your customer issues.
*NRR is one of the most important metrics for a recurring revenue company, and one you should have at your fingertips. Not sure? Here’s a refresher.
Example:
Let’s say a company has $5MM in ARR and an NRR of 95%. That means next year they should expect $4.75MM in revenue from existing customers, and need to earn $250K more just to maintain their existing revenue.
Conversely, if they could improve NRR to even 105% they would earn $5.25MM from existing customers.
That’s a difference of $500K, just from focusing on improving the experience of existing customers.
If this company can get to 120% NRR (the industry benchmark for SaaS companies) they’d improve their revenue from existing customers by $1.25MM vs. their current trajectory.
Projected Recurring Revenue Calculator
Follow the steps below to calculate your Projected Recurring Revenue:
Instructions:
- Enter your current Annual Recurring Revenue (ARR).
- Enter your current Net Recurring Revenue (NRRc).
- Identify an NRR that you achieve by reducing customer churn - this is your Goal NRR (NRRg) input.
- Click Calculate to see your results.
Now that you know what you’re playing for, here are two ways to address customer churn:
- Evaluate the issues in your company by understanding the mistakes that lead to customer churn, and addressing them internally. On this page you’ll get access to the tools and resources you need to combat the most common mistakes that lead to customer churn.
THE 5 COSTLY MISTAKES THAT LEAD TO CUSTOMER CHURN
The following five mistakes are the most common churn issues recurring revenue companies face. Any one of them will hurt your business. In combination, they’re lethal.
Mistake #1:
All churn is not created equal. Leaders in recurring revenue companies need to understand their numbers and what they mean. Get the calculators to easily quantify these metrics and convert between monthly churn and annual churn numbers.
- Logo Churn Calculator
- Revenue Churn Calculator
- Monthly Churn vs. Annual Churn Converter
Mistake #2:
Net-new customers are great, but focusing too much on front-end sales can lead to problems if you neglect customer retention. Clarify your ideal customer profile and the cost to acquire new customers so each customer is primed to stay for the long-term.
- Cost of Customer Acquisition (CAC) Calculator
- Ideal Customer Profile Evaluation Tool
Mistake #3:
Chaotic internal processes make it harder for customers to succeed, and if they don’t feel successful they’re more inclined to churn. Design internal processes for a smooth onboarding, go live and ongoing engagement through your next renewal are vitally important for increasing long-term customer value.
- Customer Lifetime Value (CLTV) Calculator
- Playbook Lifecycle Template
Mistake #4:
Loyal customers deliver disproportionately higher value to your company, but loyalty is misunderstood and underappreciated. Get a clear understanding of what makes a customer loyal and how to differentiate between repeat customers and those who are truly loyal.
- Upside of Customer Loyalty Calculator
Mistake #5:
Knowing you have a problem is one thing – doing something about it is another. And it’s not always easy. (If taking action was easy, the diet and exercise industry would look vastly different!) Get tips for activating what you’ve learned so your company doesn’t stay stuck in the suck of customer churn.
- ROI Calculator
These resources give you the tools to audit your company’s numbers and processes. You have what you need to understand where your revenue bucket is leaking and what to do to fix it.
You can make your way through the resources yourself
OR
Partner with Alignmint for expert guidance
Our customer experience professionals will evaluate your business and give you the answers you need to stop customer churn before it starts.
