This article supports Gainsight NXT, the next evolution of the Customer Success platform. If you are using Gainsight CS Salesforce Edition, you can find supporting documentation by visiting the home page, and selecting CS > Salesforce Edition.
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This article explains how various metrics are calculated in the Renewal Center module.
This article explains how Renewal Center calculations are automatically performed in the back end. Summary calculations honor the Global Filters applied and perform calculations only on those Opportunities which match the filter criteria.
Calculation of Metrics
This section explains the calculation method for metrics used in Gainsight Renewal Center.
- Renewals Due: The dollar value of opportunities available for renewal for the selected time period. Opportunities up for renewal are those that have expired or will expire during the time period. Renewals Due is calculated by adding the Target Amount field of all the opportunities which have their Due Date in the selected quarter. Only those opportunities which have a Booking type as Renewal are selected for calculation.
Renewals Due is the denominator in the calculations for Gross and Net Renewal Rates.
Formula: Renewals Due = Σ(Target Amount of qualifying Opportunities)
- Renewal Forecast: Renewal Forecast = Sum Of(Closed Won + Open Renewals that do not have Upsell + Open Renewals with Upsell - Open Bookings Type Downsell)
To learn about the calculation of this metric, refer to the Forecast section of the Configure renewal Center article.
- Gainsight Forecast: This field is calculated by adding the Gainsight Forecast Amount field of all the renewal opportunities with due dates falling in the forecast period and with their Stage field value set to either Open or Closed Won in the selected quarter. If you are unable to view this section, refer to the Settings section of the Configure Renewal Center article.
- Formula: Gainsight Forecast = Σ(DS Forecast Amount of qualifying Opportunities)
- Gross Renewal Rate (GRR): Gross Renewal Rate is the percentage of opportunities renewed in the period. GRR does not include upsell. It will never be over 100, but the higher the better.
- Formula: GRR = Renewal Forecast / Renewals Due
- Upsell Forecast: Sum of won Opportunity (All upsell + Delta Amount (Final amount - Target Amount) Renewals with Upsell)+ Sum of open Opportunity [Delta Amount (Forecasted amount - Target Amount) Renewals with Upsell + All Upsell)]
- Open Renewals with Downsell: These are the open opportunities that are expected to be won, but not with the targeted amount. The Stage value for these Opportunities is Open and Forecast Amount field has lesser value than the Target Amount field (since some amount of churn is predicted). For these Opportunities, the Forecast Amount is subtracted from the Target Amount (for each qualifying opportunity) and the total difference amount from all the qualifying opportunities is added up to get the value.This value is then added to Open Downsell to get the Forecasted Churn value.
- Open Downsell: Some Companies create a new Opportunity to exclusively track Renewals which are at risk of meeting their Target Amount. The Booking type for these Opportunities is Downsell. The Stage field is set to Open. The Target Amount of all the qualifying opportunities is added to get the required value. This value is then added to Open Renewals with Downsell to get the Forecasted Churn value.
- For instance, if the Target Amount for an Opportunity is $45,000. Consider that a CSM expects that there would be some level of Churn and the Opportunity might be sold for $40000. CSM can now either create a normal opportunity with Target Amount of $45000 and Forecast Amount of $40000 or can create a Downsell Opportunity with Target Amount of $5000.
Net Renewal Rate (NRR): Net Renewal Rate is the rate at which customers are renewing and expanding. It differs from Gross Renewal Rate, which only shows the rate at which customers are renewing and does not take upsells into account. All upsell opportunities with a close date in the selected quarter are considered for calculation. This includes upsells that are associated with renewals in the time period as well as early upsells.
Formula: NRR = [Renewals Due – Churn (both actuals to date and forecasted) + Upsell (both actuals to date and forecasted)] /Renewals Due
Where Forecasted Churn is calculated as in the above case. Forecasted Upsell is calculated as follows.
Forecasted Upsell = (Open Renewals with Upsell + Open upsell)
- Open Renewals with Upsell: These are the open opportunities that are not just expected to be won, but with a higher amount than the targeted amount. The Stage value for these Opportunities is Open and Forecast Amount field has greater value than the Target Amount field (since some amount of upsell is predicted). For these Opportunities, the Target Amount is subtracted from the Forecast Amount (for each qualifying opportunity) and the total difference amount from all the qualifying opportunities is added up to get the value. This value is then added to Open Upsell to get the Forecasted Upsell value.
- Open Upsell: Some Companies create a new Opportunity to exclusively track Renewals with a high probability of exceeding their Target Amount. The Booking type for these Opportunities is Upsell. The Stage field is set to Open. The Target Amount of all the qualifying opportunities is added to get the required value. This value is then added to Open Renewals with Upsell to get the Forecasted Upsell value.
- For instance, if the Target Amount for an Opportunity is $45000. However, if CSM expects that there would be some level of Upsell and the Opportunity might be sold for $48000. CSM can now either create a normal opportunity with Target Amount of $45000 and Forecast Amount of $48000 or can create a Upsell Opportunity with Target Amount of $3000.
- Actuals Renewals: This metric sums the amount of Renewal Opportunities won in the selected period, based on the Due Date. When an opportunity is closed, the Final Amount field is used to record the amount at which the opportunity was finally closed. Actuals Renewals calculates the Final Amount for all the Opportunities whose Stage is set to Closed Won. The count shown in the widget is based on the number of companies.
- Actuals Churn: This metric includes Lost Renewals, the downsell portion of Won Renewals, and Downsell tracked using a separate opportunity. The breakdowns can be seen in the Churn pie chart.
- Lost Renewals is the sum of Target Amount from Opportunities that were Closed Lost. The selected Forecast Period is applied to the Due Date.
- Downsell portion of Won Renewals: For won Renewals that have a Final Amount that is less than the Target Amount, we take the delta to determine the downsell portion. The selected Forecast Period is applied to the Due Date.
- Closed Downsell is an opportunity that is exclusively created to track Downsell. To avoid double-counting, if a separate downsell opportunity is used, do not also account for the downsell in the original renewal opportunity. We sum the Forecast amount of Downsell opportunities where the Stage is set to Closed Won. The selected Forecast Period is applied to the Close Date. Downsells could occur mid contract and there is not a due date for when this happens.
- Actuals Upsell: This metric includes the upsell portion of Won Renewals and Upsells tracked using a separate opportunity.
- Upsell portion of Won Renewals: For won Renewals that have a Final Amount that is more than the Target Amount, we take the delta to determine the upsell portion. The selected Forecast Period is applied to the Due Date.
- Upsell Opportunities is an Opportunity that is created exclusively to track Upsell renewals. The calculation is performed by adding the Final Amount of all the Opportunities whose Booking Type is Upsell and Stage is equal to Closed Won. The selected Forecast Period is applied to the Close Date. Upsells could occur mid contract and there is not a due date for when this happens.
Data Science (DS) Scores
Gainsight uses a flexible extendable framework that captures disparate aspects of customer health as described below. The major advantage of the score is the 360-degree capture of the various aspects of customer data, that could lead to churn. In the future, we will also take into account the way the opportunity transitions are progressing, to separate out healthy patterns from unhealthy ones.
Gainsight provides you with two fields which are calculated using Data Science:
DS Likelihood Score: This field generates a score based on the success or failure of past renewals (including renewals with upsell and downsell). The score is updated using a technique that learns the pattern of past closed renewals and updates the scores, on a monthly basis. A recursive Bayesian calculation method is used to perform the calculations. The following elements are used for calculations:
- Health Score: Captures the health of a customer as determined by you.
- CS Engagement Score: Captures the effect of customer success activities you implemented for the account. The variables involved in the calculation are:
- Number of success plans
- Number of successfully closed CTAs
- Number of timeline posts
- Number of outreaches
CS Engagement Score is an intermediate score which is not displayed to the customers. It is used as a component in the calculation of the DS Likelihood Score.
- ARR: Captures the fact that high-touch/low-touch and big/small clients are fundamentally different in nature.
- View the Factors Contributing to the DS Likelihood score: Renewal Center also displays the various factors (Gainsight features) which contribute to the DS Likelihood score. You can now get insights about what exactly is driving the Likelihood Score and also understand how much Renewal manager should rely on the score based on a view of what data source supports the score. You can now get information about the aspects of customer health, engagement, and other areas which are impacting the Score.
To view the factors which contributed to the Renewal Likelihood score of an opportunity, you must hover your mouse on the required score. When you hover your mouse on a score, you can view the following:
- Gainsight features contributing to the score.
- Level of impact the feature is having on the score (high, medium, low).
- Nature of impact the feature is having on the score (Positive, negative).
From the above image, you can infer that:
- Four Gainsight features Health score, CTAs, Success plans and Outreaches are having an impact on the score.
- Health score and CTAs have a medium impact, Success plans and Outreaches have a low impact on the score.
- Outreaches have a negative impact and rest of the features have a positive impact on the score.
The features contributing to the score and the level of impact of a feature is auto calculated by Data Science. You cannot modify these areas.
- DS Forecast Amount: The DS forecast amount is calculated in an identical manner as DS Likelihood score. However, the historic revenue conversion rates are considered instead of renewal close rates.
The Reasons framework shows more accurate and intuitive reasons for the scores and incorporates the following enhancements:
- Random forest-based model for high-volume tenants: This model captures complex interaction within your data for tenants with enough data (>50 records).
- Automatic feature selection: From the large number of variables considered, this model automatically selects the variables that are important for predicting the likelihood of closing opportunities successfully.
- Hyperparameter tuning based on cross-validation: The model is tuned automatically based on cross-validated datasets, and helps significantly improve the accuracy of the model.
- Enhanced Feature generation framework: With this model, Gainsight uses variable importances for individual variables, and their relation to other variables to surface the most relevant and actionable reasons.