Snowball Analysis
Snowball Analysis Guide
A snowball (waterfall) report shows how your customer base or revenue changes from one period to the next, broken down by movement type.
Instead of just seeing ending MRR, you see the building blocks:
- New – Revenue from brand new customers
- Growth – Expansion/upsell revenue from existing customers
- Reduction – Downgrades or partial contractions
- Lost – Full churn
- Return – Previously churned customers coming back
Why Use Snowball Analysis?
Use Snowball Analysis when you want to answer:
- What’s driving our net revenue change this month or quarter?
- Is growth mostly from new customers or expansions?
- Where is churn or downgrade concentrated?
- Which products or segments are adding or losing value?
The Snowball Framework
Jan Feb Mar Apr
───── ───── ───── ─────
Starting 1000 1050 1020 1080 ← Base from last period
+ New +100 +80 +120 +90 ← First-time customers
+ Return +20 +15 +25 +30 ← Win-backs
+ Growth +50 +40 +60 +45 ← Upsells
- Reduction -30 -50 -35 -40 ← Downgrades
- Lost -90 -115 -110 -95 ← Churned
───── ───── ───── ─────
= Ending 1050 1020 1080 1110 ← Next period's Starting
The math: Starting + New + Return + Growth - Reduction - Lost = Ending
Movement Categories
| Category | Definition | What it tells you |
|---|---|---|
| New | First-ever transaction | Customer acquisition effectiveness |
| Return | Had $0 last period, had value before that, now has value again | Win-back success |
| Growth | Same customer, higher value than last period | Expansion/upsell success |
| Reduction | Same customer, lower value (but not $0) | Contraction/downsell risk |
| Lost | Had value last period, $0 this period | Churn — your biggest concern |
Revenue vs Customer Snowballs
You can run snowball analysis on either revenue (value) or customer count. They answer different questions:
Revenue Snowball (Sum)
Tracks dollar movements. Use when you care about revenue impact.
Starting $10,000 Total revenue last period
+ New +$2,000 Revenue from first-time customers
+ Return +$500 Revenue from returning customers
+ Growth +$1,200 Additional revenue from upsells
- Reduction -$300 Lost revenue from downgrades
- Lost -$1,500 Revenue from churned customers
= Ending $11,900
Customer Snowball (Count)
Tracks logo movements. Use when you care about customer count regardless of spend.
Starting 100 Customers last period
+ New +15 First-time customers
+ Return +3 Returning customers
- Lost -10 Churned customers
= Ending 108
Note: Growth and Reduction don't apply to customer counts — a customer either exists or doesn't. These rows will show zero in a count-based snowball.
When to use each:
| Use Revenue Snowball when... | Use Customer Snowball when... |
|---|---|
| You care about dollar impact | You care about logo count |
| Customers have varying contract sizes | All customers are roughly equal |
| Tracking MRR/ARR movements | Tracking user base growth |
| You want to see expansion/contraction | You want simple in/out metrics |
Key Metrics
| Metric | Formula | Healthy target |
|---|---|---|
| Gross Churn Rate | (Reduction + Lost) / Starting | < 5% monthly for SaaS |
| Net Revenue Retention | Ending / Starting | > 100% means growth without new customers |
| Expansion Rate | Growth / Starting | Varies by business model |
Creating a Snowball Report
- Select your data source
- Verify column mapping:
- Customer ID → Unique identifier
- Period → Date column
- Value → Revenue or count to track
- Segment (optional) → Product, region, plan for breakdown
- Choose level of detail:
- Topline only — One row per movement type
- By segment — Breakdown by product/region/etc.
- Click Generate
