Revenue analytics

Revenue Analytics (LADDER Framework)

Design a revenue analytics layer that answers where revenue is being created, where it's leaking, and which lever to pull next - not a dashboard of vanity totals. LADDER decomposes ARR, attributes it, diagnoses drivers, and turns analysis into named actions.

Core Principle

Revenue analytics fails when it stops at the totals. Reporting ARR up-and-to-the-right tells you nothing actionable. LADDER decomposes revenue into the components a leadership team can act on within a quarter.

The LADDER Framework

Letter	Stage	The Question
L	Leading Indicators	Which forward-looking metrics predict ARR movement 1-2 quarters out?
A	Attribution	Where does new ARR come from - channel, motion, segment, cohort?
D	Drivers	Which 3-5 levers explain most of the variance in NRR and growth?
D	Diagnosis	What's broken or accelerating, and what's the named hypothesis?
E	Expansion Economics	What's the economics of expansion vs new logo by segment?
R	Retention Decomposition	What's GRR, contraction, churn - by cohort and reason code?

ARR Waterfall

The minimum decomposition every leader should be able to recite:

Component	Definition
Starting ARR	Beginning-of-period book
New Logo ARR	Net-new customer ARR added
Expansion ARR	Seat / module / price-up from existing customers
Contraction ARR	Seat / module / price-down from existing customers (not churn)
Churn ARR	Customers lost (logo or full)
Ending ARR	Computed from the above
NRR	(Ending − New Logo) / Starting
GRR	(Starting − Contraction − Churn) / Starting

Leading Indicators

Lagging metrics (ARR, NRR) confirm what already happened. Leading metrics let you act:

Metric	Leads What	Lead Time
Qualified pipeline coverage (3x)	Bookings	1-2 quarters
Engagement score trajectory	Renewal / NRR	2 quarters
Health score distribution	GRR	1-2 quarters
MQL→SQL conversion	New logo bookings	1 quarter
Expansion pipeline coverage	Expansion ARR	1 quarter
Win-rate by segment	Booking productivity	1 quarter

Driver Decomposition

Driver	Definition	Watch For
Acquisition	New logo ARR / period	Channel mix shift, win-rate change
Expansion	Expansion / Starting ARR	Mix of seat vs module vs price
Retention (GRR)	1 − (Churn + Contraction) / Starting	Cohort drift, segment concentration
Pricing	Realized ARPA trend	Discount creep, packaging drift
Mix	Segment / motion share	Concentration risk, dilution risk

Economics

Metric	Formula	Why
CAC Payback (months)	Fully loaded S&M / (New ARR × gross margin / 12)	Sustainability of acquisition
LTV / CAC	Gross-margin LTV / CAC	Long-run profitability
Magic Number	(Net New ARR × 4) / Prior-Q S&M spend	Efficiency of growth motion
Net Magic Number	Same but using net new ARR (incl. churn)	Truer efficiency view
Expansion ROI	Expansion ARR / (CS + Expansion S&M cost)	Cheaper growth lane usually

Cohort Retention

Cohort retention surfaces what the totals hide:

Lens	Insight
Logo retention by acquisition cohort	When did the product stop retaining?
NRR by ICP segment	Which segments compound, which decay?
Channel-of-acquisition retention	Which channels deliver durable revenue?
Use-case retention	Which use cases retain best?

Output

Save to outputs/revenue-analytics-[scope]-[YYYY-MM-DD].md

Artifact	Description
ARR Waterfall	Period-over-period with segmentation
Leading-Indicator Pack	6-8 metrics with thresholds and trend
Driver Decomposition	Top 3-5 drivers with quantified contribution to variance
Cohort Retention Heatmap	Cohort × period with segment cuts
Economics Pack	CAC payback, LTV/CAC, magic number, segment breakdown
Diagnosis Memo	Anomalies + hypotheses + named owners
Forecast Roll-Up	Bottoms-up vs tops-down with delta explanation

Process

1. Lock the ARR waterfall definitions - one source of truth across finance, CS, and sales
2. Build the leading-indicator pack with named thresholds, not just charts
3. Decompose drivers with explicit attribution; refresh quarterly
4. Stand up cohort retention with segment cuts that match motion design
5. Wire economics into the operating cadence - not just board prep
6. Diagnose monthly: anomaly → hypothesis → owner → action

Tips

1. One ARR definition - every team must agree on what counts as ARR
2. Cohort > snapshot - retention totals lie; cohorts don't
3. Always reason-code churn and contraction; otherwise the diagnostic loop is closed
4. Leading indicators with no threshold are decoration
5. CAC payback is the most honest growth metric - easy to game, hard to fake

Pairs With

• customer-analytics - Engagement and behavioral cohorts feed NRR decomposition
• revenue-forecasting - Drivers and leading indicators inform the forecast
• customer-success - Health-score distribution is a top GRR driver
• budget-allocator - Economics inform reallocation decisions