Growth Accounting Analyzer
Break down your user growth into New, Retained, Resurrected, and Churned components. Analyze Net Growth and Quick Ratio.
Formula
Net Growth = New + Resurrected - Churned\nQuick Ratio = (New + Resurrected) / Churned
Growth Accounting splits the single 'Active Users' metric into its components. This reveals *how* you are growing. If you are growing only because you buy new users but churn them instantly, this model exposes that weakness.
Worked Examples
Example 1: Healthy SaaS
Problem:New: 100, Resurrected: 20, Churned: 50.
Solution:Gain = 120, Loss = 50. Net = +70.
Result:Quick Ratio: 2.4 (Healthy growth).
Frequently Asked Questions
What is a good Quick Ratio?
For SaaS: > 4 is excellent, 2-4 is good, < 2 is inefficient. For Consumer: > 1.5 is acceptable due to naturally higher churn.
How do I define 'Active'?
It depends on your product. Slack might be 'sent a message', Airbnb might be 'booked a stay'. Be consistent.
Why separates Resurrected from New?
Resurrected users cost less to acquire (usually just an email) compared to New users (ads). They behave differently.
Can Churn be positive?
In revenue terms (Net Dollar Retention), expansion revenue can offset churn, making 'Net Churn' positive. In user terms, churn is always a loss.
What is 'Contraction'?
For revenue growth accounting, 'Contraction' is when a user stays but pays less. Growth Accounting Analyzer focuses on User counts.
How do I fix a low Quick Ratio?
Fix Churn first. Improve onboarding, customer success, and product stability. Then boost Resurrections via email marketing.
What is the 'Leaky Bucket' theory?
The idea that pouring water (New Users) into a bucket with holes (Churn) is futile until you patch the holes.
Should I include trial users?
Usually, Growth Accounting focuses on 'Activated' or 'Paid' users to avoid noise from low-intent signups.
Background & Theory
The 4 Buckets Explained
- New: First-time users. Measures acquisition efficiency.
- Retained: Users active last period AND this period. Measures product market fit.
- Resurrected: Users inactive last period but active this period. Measures re-engagement campaigns.
- Churned: Users active last period but inactive this period. Measures dissatisfaction.
The Quick Ratio
Similar to the financial Quick Ratio, this measures growth efficiency. A ratio > 1 means you are growing. A ratio < 1 means you are shrinking. VCs typically look for a Quick Ratio > 4 for high-growth consumer apps and > 2 for B2B SaaS.
Retention is King
Growth accounting proves that retention is the most critical lever. You cannot out-acquire a high churn rate indefinitely. As the user base grows, the absolute number of churned users grows, eventually overtaking new user acquisition (The "Shark Fin" curve).
History
Origins in Economics
Growth accounting originally comes from macroeconomics (Robert Solow, 1950s) to attribute GDP growth to capital, labor, or technology. In the tech world, it was adapted by growth practitioners (notably at Facebook and Chamath Palihapitiya) to deconstruct Monthly Active Users (MAU).
The Facebook Era
Facebook's growth team realized that "Total MAU" is a vanity metric. It hides the underlying dynamics. They popularized splitting growth into: New (Acquisition), Retained (Stickiness), Resurrected (Re-engagement), and Churned (Attrition). This 4-bucket model is now the industry standard for PLG (Product-Led Growth) companies.
Modern Application
Today, every VC and board expects a "Growth Accounting Waterfall" or "Bridge". It answers the question: "Are we growing because our product is sticky (Retention) or because we are burning cash on ads (New)?"