Restart (AKA Resurrection) ARR

• By
• Chris Burgner

  Chris Burgner

  12+ years of experience, most recently as a Director of Finance at Intercom.

  

Restarts happen when a customer who had previously churned—cancelled their subscription or downgraded to a free plan—starts a new paid subscription.

Most businesses limit the Restart window to one year. This means that if a customer churns and returns after more than one year and starts a new paid subscription, they will contribute to Gross New ARR. Landing on the right definition for your business depends on your go-to-market motion.

In enterprise companies, where customers are on annual contracts, there’s less of a need for a defined window, as the customer proactively communicates Churns in the form of an opt-out. However, self-serve or PLG businesses tend to see customers come and go more frequently and may want to consider adding a 3-6 month limit to the Restart window.

Why it matters

Restart is less important as a performance indicator and more about hygiene. Differentiating between win-back customers and those joining for the very first time helps eliminate false signals around Gross New and leads to better top-of-funnel reporting.

Having said that, understanding why customers come back can provide valuable testimonials for marketing and insights for product to prevent future Churns. It’s also a great indicator of the progress you’ve made as a team, in which you’ve potentially shored up shortcomings that customers previously felt.

How to optimize it

Because a Restart event mainly depends on the customer taking action, this component of ARR receives less proactive attention.

The obvious tactic is to target win-back campaigns at churned customers. But over the long run, what will ultimately drive restarts is your ability to fix key product issues. Resolve the reasons that customers churn, and you’ll see some customers restart.

Hopefully, you now have a deeper understanding of ARR and each of its components. There was a lot to digest, so we’ve created a cheat sheet for you:

ARR Component	Definition	Levers
Gross New	The total value of subscriptions from new customers.	Increase lead volume, improve funnel conversion, increase the starting price point
Expansion	The total value of additional spend from existing subscriptions, e.g. add more seats, upgrade to a more expensive plan, buy add-ons.	Pricing that better captures the value customers derive, launch new products and offerings, upsell and cross-sell campaigns
Contraction	The total value of reduced spend from existing subscriptions, e.g. remove seats, downgrade to cheaper paid plan.	Improve onboarding and activation of feature sets most commonly dropped, don't oversell in the initial sale
Churn	The total value of canceled paid subscriptions.	Shore up key product gaps/issues, improve onboarding and activation, modify pricing and packaging
Restart	The total value of new subscriptions from previously churned customers within a given time window, e.g. one year.	Closing known product gaps, persistence