How Do I Count Reactivation MRR in My Metrics | SaaS Metrics School | MRR
Welcome to another edition of SaaS Metrics School with Ben Murray, The SaaS CFO! In today’s video, we’re diving into a crucial but often overlooked aspect of SaaS MRR metrics — reactivation MRR. Understanding how to accurately account for reactivation MRR can greatly impact how we view monthly recurring revenue and our MRR waterfall, ultimately affecting our understanding of customer retention, net revenue retention (NRR), and gross revenue retention (GRR).
What is Reactivation MRR? Reactivation MRR is a unique revenue component, especially prevalent in SaaS models with a self-service motion. Think of a customer who signed up for your service with a credit card. Sometimes, that credit card expires or is declined, causing what might look like churn — but it’s not intentional. They didn’t actively choose to stop using your service. When they update their payment info and rejoin, this is where reactivation MRR comes into play.
Why It’s Important to Separate Reactivation MRR in Your MRR Waterfall As we know, the MRR waterfall has several components:
New MRR
Expansion MRR
Contraction MRR
Churn MRR
But what about reactivation? Without properly categorizing it, reactivation MRR could skew your new customer acquisition metrics or even affect your customer acquisition cost (CAC) analysis, which could give an inaccurate picture of your growth. By treating it as part of net revenue retention rather than as new MRR, we preserve the accuracy of both our customer acquisition metrics and our retention metrics.
Where Does Reactivation MRR Belong? To keep your metrics clean, I recommend that reactivation MRR not be counted as new MRR. Instead, it should contribute to your net revenue retention, which looks at:
Expansion
Contraction
Churn
The existing customer base is what drives NRR, and reactivated users are part of that pool. Including reactivation MRR in NRR allows us to reflect a more accurate retention trend, showing the ability of the product to bring back former users, while keeping new acquisition metrics untarnished.
How Reactivation Impacts Logo Count and Customer Count Metrics Reactivated customers should also be tracked in your logo waterfall or customer waterfall. Just as MRR has its flow — beginning balance, new MRR, reactivation, churn, and ending balance — so does your customer count. Reactivation here shows that a previously counted logo is returning, allowing for more precise customer lifetime value (CLTV) analysis.
Common Issues with Reactivation in SaaS Metrics Not every product or service will see reactivation often. However, in models with credit card billing, self-service, or monthly billing cycles, it’s vital to include reactivation as a separate line item in both revenue and customer counts. Missing this can distort your understanding of customer churn, MRR churn, and NRR growth. It’s also essential to know where this revenue is included in SaaS metrics reports to make sure you’re interpreting your data correctly.
Key Takeaways:
Reactivation MRR should be included in NRR but not in new MRR, to avoid influencing new acquisition metrics.
Reactivated customers should be returned to your customer waterfall under existing or reactivated customer counts.
In GRR, reactivation MRR may still show as churn due to the initial exit but helps support retention metrics when they return.
Whether you’re dealing with high-volume SaaS subscriptions, low-touch sales models, or simply interested in advancing your understanding of SaaS metrics, I hope this video clarifies the importance of defining reactivation MRR in your tracking. It’s about creating a clear, precise picture of how your business retains and re-engages users, without muddling new acquisition data. Be sure to check how your SaaS metrics system tracks this revenue type, and apply these insights to keep your MRR tracking accurate!
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