What is MRR Retention Cohort?

Modified on: Wed, 25 Aug, 2021 at 10:40 AM

MRR Retention Cohort is a metric that shows how you've been retaining the MRR earned from a cohort of subscribers activated in a month, over the subsequent 12 month period. A retention rate greater than 100% is great news. 

 

Formula
∑ of MRR in a given month / ∑ of MRR earned in the activated month
 

Let’s understand this with a few examples:

Example 1: 

A bunch of customers activated in a month (say Jan 2017) with an initial MRR of $1000 are growing to $5000 MRR in Dec 2017. Your retention rate for Dec 2017 is increased to 500% in this case.

Example 2: 

If you had $1000 MRR at the beginning of a month and lost $100 MRR due to churn, but still gained $200 MRR from product upgrades in the same month, the MRR Retention Rate for that month would be 110%. 

Cohorts are good indicators of both Lead quality (when you traverse growth row by row) and the impact of your product and engagement activities (when you traverse by columns). Also, look at your MRR cohort in conjunction with the Subscription Retention Cohort to see how many customers in the original cohort have been retained after 12 months. One big customer could be pulling the entire cohort forward, or one churn could cause a huge drop. If you see a sudden up or down in percentage, you need to look at the subscription retention cohort to see if this is a trend or a one-off caused by few customers.

MRR retention cohort is an OOTB(Out of the box) report available under metric explorer which provides a monthly view of the cohort retention rates for the last 24 months. If your requirements are to create a customized MRR retention cohort, this can be achieved using a report builder.

M
Monica is the author of this solution article.

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