Renewal rate

Contracts renewed over contracts due in the period, by count and by prior value, with a stated grace window.

DefinitionContracts renewed over contracts due in the period, by count and by prior value, with a stated grace window.

Renewal rate is contracts that renewed within the grace window divided by contracts whose end date fell in the period. It is computed by count and by prior value, because the contracts that leave are rarely average in size, and by renewal number, because first renewals lose most. It is not retention rate, which counts customers or revenue across a period whether or not anything was due. See the renewal rate benchmark.

How it is computed

Contracts renewed within the grace window divided by contracts whose end date fell in the period, by count and by prior value.

Example

Of 100 contracts due, 92 renewed: 92 percent. By prior value, $3.7 million of $5.0 million: 74 percent.

Where it goes wrong

Count only. The two largest contracts on the calendar are inside the eight that left.

Articles that use this term

Wallet share and penetration · Education

Adoption by purchase cohort: what institutions that bought three years ago hold now

How an education provider reads its base by first-purchase cohort, from the order history: the institutions that first bought in each year, how many are still customers, what programmes they hold now against what the cohort held at first purchase, the cohorts that expanded and the cohort that stalled, and why a cohort view finds the year something changed in onboarding or product that the renewal rate never explains.

16 Sept 20262 min read Forecast and pipeline · Insurance brokers

Claims experience and retention: the clients whose claims changed their renewal risk

How a commercial insurance broker joins the claims file to the placement ledger and the renewal outcomes to see how claims experience affects retention: loss ratio per client per line, the clients whose ratio moved past the carrier's appetite, the clients with a large open claim inside the renewal window, the historical non-renewal rate by claims band from the broker's own book, and the remarketing list ranked by both the risk and the premium.

16 Sept 20263 min read Board and management reporting

Count-weighted and value-weighted: why every ratio on this site says which

The difference between a ratio weighted by count, accounts, deals, inquiries, and one weighted by value, revenue, notional, premium, why the two disagree whenever the large items behave differently from the small ones, the six measures where the difference is largest, hit ratio, coverage, win rate, share of wallet, renewal rate and retention, the rule that a report shows both and ranks by value, and the case where count is the honest one.

16 Sept 20263 min read Board and management reporting · Telecoms and connectivity

Order-to-activation time per customer: the provisioning delays that precede churn

How a business telecoms provider measures the days from a service order to activation per customer and per site from the order and provisioning exports, the norm per service type from its own history, the customers whose recent orders took twice the norm, the correlation with contract non-renewal from the provider's own outcomes, and the list that reaches the account manager while the customer is still installing.

16 Sept 20262 min read Forecast and pipeline

Pipeline coverage by industry: what the pipeline is when there are no deals

Pipeline coverage is open pipeline over remaining target, and on many desks there is no CRM pipeline at all: the pipeline is renewals due, tenders in flight, RFQs open, applications pending, or the season's filings. This hub gives, for twelve industries, what stands in for the pipeline, where it lives, how it is weighted, and the multiple the desk actually needs, with the guide for each.

16 Sept 20263 min read Board and management reporting

Renewal rate, retention rate and churn rate: three definitions that get swapped

The difference between renewal rate, retention rate and churn rate, which denominator each uses, why they do not add to 100 percent, how each is computed on customers and on revenue, the period and cohort rules that make them comparable, and a worked example where the three tell three different stories about the same quarter.

16 Sept 20262 min read