Growth Accounting Metric Decomposer
Decompose user growth into acquisition, retention, and churn components. Enter values for instant results with step-by-step formulas.
Formula
Quick Ratio = (New Users + Resurrected Users) / Churned Users
Quick Ratio measures growth efficiency. >2 is excellent, 1-2 is healthy, <1 means shrinking. Decomposes growth into new, resurrected, retained, and churned segments.
Worked Examples
Example 1: Healthy SaaS Growth
Problem:Period: 30 days. Start: 10,000 users. End: 12,000. New: 3,000. Resurrected: 500. Churned: 1,500.
Solution:Net growth: 12,000 - 10,000 = 2,000 (+20%) Components: New: +3,000 Resurrected: +500 Churned: -1,500 Net: +2,000 ✓ Quick Ratio: (3,000 + 500) / 1,500 = 2.33 Churn rate: 1,500 / 10,000 = 15% Retention: 85% monthly (Good for B2C SaaS) Growth drivers: - New users: 60% of gross growth - Resurrection: 10% - Retention: preventing 30% loss Health: Excellent (Quick Ratio >2)
Result:20% growth | Quick Ratio: 2.33 (Healthy) | Retention: 85%
Example 2: Leaky Bucket Problem
Problem:Period: 30 days. Start: 5,000. End: 5,200. New: 2,000. Resurrected: 200. Churned: 2,000.
Solution:Net growth: 200 (+4%) Components: New: +2,000 Resurrected: +200 Churned: -2,000 Net: +200 Quick Ratio: 2,200 / 2,000 = 1.1 Churn: 40% (TERRIBLE!) Retention: 60% monthly Problem: Adding 2K users but losing 2K - Acquisition working - Retention broken - Quick Ratio barely >1 Action: STOP growth spend until retention fixed. For every $1 on acquisition, spend $3 on retention.
Result:4% growth (Unhealthy) | Quick Ratio: 1.1 | Fix retention URGENTLY
Example 3: Declining Product
Problem:Period: 30 days. Start: 20,000. End: 18,500. New: 1,000. Resurrected: 100. Churned: 2,600.
Solution:Net growth: -1,500 (-7.5%) Components: New: +1,000 Resurrected: +100 Churned: -2,600 Net: -1,500 Quick Ratio: 1,100 / 2,600 = 0.42 (CRISIS) Churn: 13% monthly = 81% annualized! Death spiral: - Losing 2.6K users - Only acquiring 1.1K - Shrinking 7.5%/month At this rate: 6 months to 50% user loss Immediate actions: 1. Interview churned users 2. Freeze features, fix core 3. Emergency retention program
Result:-7.5% growth | Quick Ratio: 0.42 (CRISIS) | Product in decline
Frequently Asked Questions
What is growth accounting?
Growth accounting decomposes user growth into components: new users added, existing users retained, churned users lost, and resurrected users who return. It reveals whether growth is acquisition-driven or retention-driven.
Should I prioritize growth or retention?
Retention first for most products. Leaky bucket problem: adding users without fixing retention wastes acquisition spend. Retention improvements compound over time. Exception: very early stage validating product-market fit.
What metrics should I track with growth accounting?
Essential: MAU/DAU, activation rate, retention curves, churn rate, quick ratio, and LTV:CAC. Track by cohort and segment. Weekly review for fast-growing products, monthly for most others.