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Trailing Period Retention

Retention measures a company’s customer bases’ expansion, contraction, and churn relative to a fixed earlier period (12 months by default, adjustable with the Trailing Period setting). This non-cohorted view of retention gives insights into customer behavior over a set period of time.

Trailing 12 Month Retention = ARR (or count) of customers active in month x and month x+12  ÷ ARR (or count) of customers active in month x

Many people find trailing period retention more intuitive than cohorted retention because the x-axis is dates instead of the nebulous “Month 12”, and because there’s just one number for the current period. Trailing 12 month retention also makes it easy to double-click on what's happened just in the last year, versus across the entire history of the business, and to see the impact of making changes in a business, such as hiring a Customer Success Manager, 3 or 6 months later.

However, because trailing period retention combines data from companies at different stages of their customer journey, it can hide some of what’s going on within your customer base. The most acute example of this is if you look at retention for the trailing 1, 3, or 6 months: most SaaS companies have annual contracts, so customers are really only at risk of churning every 12 months. This means that if you look at customer retention compared to 3 months ago, only a small percentage of your customers have had the opportunity to churn, while all have had the opportunity to expand. This allows you to simultaneously have high churn and high Net Dollar Retention. Especially if you’re growing fast and your newer cohorts are larger than older ones, non-cohorted retention may obscure a real churn issue in the business. Only when growth slows will the full extent of this “leaky bucket” issue become apparent.

Types: Net Dollar Retention, Gross Dollar Retention, Logo Retention

Settings: Segments, Date Range, Date Aggregation, Trailing Period, Revenue Type

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Stage Conversion Rate

Stage Conversion Rate is the While Pipeline Value sums the total ARR of active opportunities in pipeline, weighted pipeline is weighted based on the current deal stage. Weighted pipeline value is a more accurate estimate of Closed Won ARR based on the current pipeline value.

How do I calculate pipeline?

Let's assume we have the following list of opportunities currently active in our sales process:

‍

Deal Name

Sales Owner

Stage

ARR

ACME Corp. - New Business
Bugs Bunny
Stage 1
$10,000
Bonner Books - Upsell
Bugs Bunny
Stage 2
$25,000
CHOAM - New Business
Daffy Duck
Stage 2
$15,000
Daedalus Research - Upsell
Daffy Duck
Stage 3
$30,000
Bugs Bunny
Electric Enterprise - New Business
Stage 3
$50,000
$20,000
Fabulous Factories - New Business
Daffy Duck
Closed Lost

‍

The total pipeline for these opportunities is $130,000. Additionally, we can also get pipeline totals for our two sales reps: Bugs Bunny ($85,000) and Daffy Duck ($45,000).

Note that Fabulous Factories - New Business is omitted from this sum, as the stage is marked as "Closed Lost".

We can summarize our pipeline by Stage to understand how much ARR is in each step of the sales process. To summarize the Pipeline ARR by Stage, we generate the following ARR table:

Stage 1 Pipeline

Stage 2 Pipeline

Stage 3 Pipeline

Total Pipeline

$10,000
$40,000
$80,000
$130,000

‍

While we have the total pipeline value here, we can apply the weightings to more accurately estimate how much of the pipeline ARR will be Closed Won.

What is probability to close?

Probability to Close is a percentage that estimates how much of the ARR that is in a particular stage of a pipeline is expected to be Closed Won. Typically, Probability to Close will be lower in earlier stages of the sales process and higher in later stages of the sales process.

If we multiply the probability to close by the Pipeline ARR, we'll get the Weighted Pipeline ARR value in each stage.

Stage 1

Stage 2

Stage 3

Pipeline ARR ($)

$10,000

$40,000
$80,000

Probability to Close (%)

25%
40%
65%
$2,500
$16,000
$52,000

Weighted Pipeline ARR ($)

Probability to Close assumptions for each stage assume that deals in different stages have a different chance of being won. Deals in Stage 1 are 25% likely to be won, while deals in Stage 2 are 40% likely to be won, and deals in Stage 3 are 65% likely to be won.

After applying the probability to close to the Pipeline ARR, we now have $2,500 in Stage 1, $16,000 in Stage 2, and $52,000 in stage 3, for a total weighted pipeline value of $70,500. This estimate is closer to the real value we expect to have in Closed Won ARR.