Analytics
Growth Accounting
Growth accounting is a framework that decomposes net revenue growth into its component parts: new customer revenue, expansion revenue, contraction, and churned revenue. It reveals the true health and quality of growth by showing whether it comes from acquisition or existing customers.
Examples
Growth accounting shows that while total revenue grew 30%, new customer revenue contributed 45% and churn subtracted 15%, indicating strong acquisition but a retention problem.
Best Practices
Report growth accounting monthly, visualize the components as a waterfall chart, compare the ratio of expansion to churn, and set targets for each component independently.