[SaaS Series] How to Analyze Revenue Churn in Salesforce

The unfortunate truth of running a Software-as-a-Service (SaaS) business is that, inevitably, some customers will churn. Some customers who are unsatisfied with your product or service might choose not to re-sign the contract when the annual term runs out. Worse, some customers who are so dissatisfied with what they’ve acquired might find a legal loophole to escape from the contract early. Other customers might even go out of business, at which point they would have no recourse but to churn. Analyzing this churn in revenue and how it will affect the company’s overall revenue forecast is critical to managing a SaaS business.

Export to Excel? No thanks!

Yet, analyzing revenue churn in Salesforce is a Herculean task that requires tremendous Excel capabilities (and A LOT of time and effort). First, as mentioned in our post on the difference between bookings and revenue forecasts, companies need to ensure that they have start and end dates assigned to product line items on accounts in Salesforce. Without that, these companies won’t be able to venture through historical data to truly analyze revenue churn in Salesforce. Then, if a customer is churning early, an early termination date has to be entered.

Next comes the truly headache-inducing challenge. To analyze revenue churn in Salesforce and get down to the nitty-gritty details, Sales VPs will have to export reams of data into Excel and then calculate that specific churn information out across different accounts and time frames. With hundreds of opportunities and various product line items, this is a massive undertaking that doesn’t even really answer the truly important questions. This kind of analysis demands an Excel power user and requires difficult lookups instead of the typical Excel VLookup function.

Which opportunities were valid for a particular month? What accounts churned on which specific products? Are the number of upsells (negative churn) superseding the number of cancellations (positive churn)? Are larger accounts churning more quickly than smaller accounts, or vice versa? What about specific products?

Essentially, exporting revenue churn data from Salesforce to Excel provides a tedious, manual option for attempting to answer the aforementioned questions. Yet, even those options are limited.

You have to be careful not to include new business money in your revenue churn analysis. You have to manually go to the previous month and look at all the accounts or product line items that were active then, and then see if they are still with you this month or not. If you simply subtract this month’s revenue from last month’s revenue without considering when the account was active, you’ll end up with errors in your analysis.

The moral of the story is that analyzing revenue churn in Salesforce by exporting to Excel is a near-impossible task that doesn’t fully paint the picture. Without extensive filtering and drilling down deeper, that surface-level analysis of revenue churn will not be able to answer the truly interesting questions that Sales VPs and CEOs ask. To do that, turn to InsightSquared and our Churn Rate report.

InsightSquared’s Churn Rate report

Our Churn Rate report calculates revenue churn by identifying the amount of monthly revenue from active accounts the previous month and determining how much of that revenue will no longer continue in the current month, or if any revenue will be added in the form of upsells. However, instead of simply providing a positive or negative revenue churn figure in each month, users of this report will be able to filter and drill in that much deeper to answer the truly tough questions.

For instance, consider filtering churn by product. You might find out that you are selling a great deal of Product X, but ultimately churning half of those customers within a month of them using that product. Alternatively, you are selling very little of Product Y, but once those customers try that product, they will not hesitate to be upsold, resulting in negative revenue churn. This kind of information can be incredibly enlightening to business owners, yet nigh-impossible to figure out in Salesforce.

The Churn Rate report also allows users to home in on specific months to look at all the churn – positive and negative – for a particular month. This is great for studying historical trends which, given the snapshot-only capabilities on Salesforce, is impossible to do without this report. Clicking on a specific month provides a quick overview of which accounts were upsold this month and which ones decided to cancel their contracts and churn.

Don’t be stuck wading through reams of exported-to-Excel data simply to conduct surface-level analysis of revenue churn. Use InsightSquared’s Churn Rate report to get not only an accurate overview of your customer and revenue churn rates over a long period of time, but also, by filtering, to get deeper-level analysis that provides truly enlightening answers to tough questions.