Renewal Rate

Although the renewal rate is somewhat of a historical metric, it may help identify an early downward trend in renewals. The downward trend may be masked when tracking only aggregate churn and retention. It’s much easier to identify a pattern when isolating the five customers churning out of one hundred customers in a given time period versus five customers churning out of one thousand total customers.

Organizing your renewals by month or quarter benefits your account management and customer success teams. These teams can gain forward visibility on upcoming renewals by month and the historical renewal trends. Each team can prepare for upcoming renewal discussions and/or potential customer expansion opportunities. Because a single month of renewed customers is a blend of multiple customers, you could argue that renewal rate is too generic and backward-looking. To make the renewal rate more powerful and predictive, use other SaaS metrics such as Upsell Rate and Propensity to Renew.