Sales
Earned growth rate (EGR)
Earned Growth Rate (EGR) is a metric that measures the organic growth of a company's customer base and revenue, excluding growth from price increases or acquisitions. EGR focuses on growth earned through customer loyalty and referrals, making it a valuable indicator of customer satisfaction and the company's organic growth health.
HOW TO MEASURE
EGR is calculated by comparing the revenue from retained customers, plus revenue from customer referrals, against the revenue from the same cohort in the previous period. The result is expressed as a percentage to show the growth rate.
HOW TO IMPROVE
Enhance Customer Satisfaction: Improve product quality and customer service to increase satisfaction and encourage referrals.
Loyalty Programs: Implement or enhance loyalty programs that reward customers for referrals and repeat business.
Customer Feedback: Actively collect and respond to customer feedback to refine products and services.
Marketing Focus: Tailor marketing efforts to leverage happy customers as advocates for the brand.
FORMULA
EGR = ( (Revenue from Retained Customers + Revenue from Referrals) / Previous Period Revenue −1) × 100%
EXAMPLE
If a SaaS company had $1 million in revenue from a cohort of customers in one year and retained $800,000 from those customers the next year, and those customers referred new business worth $300,000, the EGR would be: EGR=(800,000+300,000/1,000,000−1)×100%=10%. This indicates that the company's organic growth from customer loyalty and referrals is 10%.
DEPARTMENT USAGE
Marketing: To assess the effectiveness of referral and loyalty programs.
Sales: To understand how current customers contribute to revenue growth.
Customer Success: To gauge customer satisfaction and its impact on business growth.
Finance: To project future revenues based on organic growth metrics.
View the collection of Metrics Workshops.