How to Use Net Annual Recurring Revenue Changes Metric
We’re excited to share a series of posts covering critical subscription metrics that you can access in Zuora Analytics. Zuora Analytics is available to all Zuora Billing users and gives you access to out of the box metrics, trend analysis, and the ability to visual your KPIs on dashboards. Each post will cover one metric and show you how to use it to uncover opportunities in your business.
We’re kicking off with the highly requested Net Annual Recurring Revenue Changes metric, also known as Net ARR Changes. This is an important metric for every subscription business because it tells you how much predictable revenue your business can count on in the future. With the Net ARR Changes metric you see it broken down by business impact category. Think expansion, contraction, churn, and more.
Watch this short demo video below to see how you can leverage Net ARR Changes.
Have a metric you’d like us to cover? Drop us a comment below.
Hi everyone! My name is Emma Shaver, I’m on the Product Marketing team here at Zuora. Today I’m excited to walk you through the Net ARR Changes card in Zuora Analytics. I’m going to navigate over to my dashboard and today I’m going to be looking at the Executive Team dashboard, specifically digging into this Net ARR Changes card. ‘ARR’ stands for Annual Recurring Revenue, so I’m going to click into this. You can think of this Net ARR Changes card as the compass for your business and make decisions on how to direct resources based on what you’re finding here.
Let's take a look at a couple different months and analyze what we're seeing in each of these. If we look at July all the way through October, what we’re seeing is a growth in new business. This is happening over a four month period, so this definitely indicates a trend. Because New Business is growing so much that means the volume of new customers you are bringing on is likely very high. In that case, you want to make sure your Customer Success team is fully resourced to be able to handle that volume of new business.
Another thing we can look at here, that’s interesting, is Expansion revenue for the month of September was down 40%. With all of these metrics you want to take the opportunity to dig in more and one interesting thing we can do to dig in is to filter by product. In this case, I’m actually going to filter by the product name ‘CS Analytics’. When I filter by this and go back to September and look at Expansion, it’s down 31% for this product, that could be contributing to the decline in Expansion revenue for the month of September. Then I can go up here and take off this filter. Churn is another metric you want to keep a really close eye on. Another way to filter to take a look at any of these metrics, in addition to product name, is the billing period. You may find that the billing period for monthly you may have a higher churn rate than the billing for annual. You could look at each of these categories just by filtering it up here. Remove that filter again. Then a few other categories you’ll see here to keep in mind, Contraction is not full churn, rather think of it as a downsell. No Change is subscribers who have had no change in their overall gross ARR. You’ll see here that we have Resume subscription and you may also have Suspended subscription as categories here, this is if you are using that suspend and resume functionality in Zuora.
That’s it for the Net ARR Changes card and digging into the different business impact categories, we’ll go back to the dashboard. Tune in to the other videos for quick tips on Zuora Analytics. Thanks for watching!