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Earned Growth Rate
Earned Growth Rate was introduced by Fred Reichheld as a way to account for the value of customer retention. It’s a simple idea, and it can help to show how much of your revenue is due to customer loyalty.
This template will help you calculate it.
You can download a PDF copy of the template here.
How to use this template
Start with your revenue last year and look at what you earned from that same group of customers this year. You’ll have lost some, some will have reduced what they spend, and some will have spent more. The total represents your net revenue retention.
Now look at revenue from new customers you acquired through referrals, and represent that as a percentage of last year’s revenue. That’s your earned new revenue. Any remaining difference between this year and last year is new revenue that you’ve had to “buy” through marketing, promotions, etc.
To calculate your Earned Growth Rate add up your net revenue retention and earned new revenue and subtract 100%. This figure might be negative (even if your overall revenue growth is positive).
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