Learn how you can Unlock Limitless Customer Lifetime Value with CleverTap’s All-in-One Customer Engagement Platform.
![How to Calculate Month Over Month (MoM) Growth [Calculator]](https://clevertap.com/wp-content/uploads/2019/12/Month-over-Month-1.png?w=768)
Month over month (MoM) calculator measures the rate of change in the value of a metric on a monthly basis. Learn the formula for calculating MoM growth rate and discover its benefits for businesses seeking to make informed, timely decisions.
Waiting for quarterly reports could mean going into mid-quarter meetings without actual or current data. This makes month over month (MoM) growth metrics essential tools for businesses looking to track their performance and make data-driven decisions on shorter time windows.
Calculating growth rate month over month offers a more immediate picture of a company’s health than yearly or quarterly metrics. Monitoring MoM growth can serve as an early warning system, alerting you to potential issues before they become major problems.
By measuring how key performance indicators (KPIs) change from one month to the next, you can provide valuable insights into short-term trends.
In this blog, we will teach you how to calculate month over month growth and provide a user-friendly month over month calculator. This tool takes the work out of calculating your month over month change, allowing you to focus on what really matters—analyzing and acting on the results.
Month over month growth is a crucial metric that measures the change in performance between one month and the immediately preceding month. The abbreviation for month over month is MoM.
Many different business functions use a MoM calculator. Understanding what month over month means helps businesses have a common time window that establishes a common language and source of truth within the company.
However, functions may not always track the same metrics. Different departments within a company track month over month change in various ways:
Learning how to calculate growth rates is crucial for accurately assessing short-term performance. While tracking longer-term metrics like quarter over quarter (QoQ) or year over year (YoY) growth is important, calculating MoM growth rate offers immediate feedback on recent initiatives and strategies.
Calculating month over month growth is a straightforward process. Here’s how to do it:
Step 1: Gather your data for two consecutive calendar months.
Step 2: Apply the month over month formula to your data.
Month over Month Growth Rate = (Current Month Value – Previous Month Value) / Previous Month Value * 100
Let’s walk through a dummy example:
Suppose your company’s revenue was $100,000 in January and $120,000 in February.
Step 1: Data gathering
Step 2: Apply the month over month formula
Month over Month Growth Rate = ($120 – $100) / $100 * 100
= $20 / $100 * 100
= 0.2 * 100
= 20%
Therefore, your MoM growth from January to February was 20%.
If that seems complicated, you can always use a month over month calculator.
Our MoM calculator automates the formula behind growth rate calculations, saving you time and reducing the risk of errors. Simply input your data for two consecutive months, and the calculator will instantly provide you with the percentage change across various metrics.
Now that you know how to calculate growth rate, you can use this calculation to measure increases in any metric you like. Common use cases for a MoM calculator include calculating revenue growth, customer acquisition rates, active users, or employee count.
Tracking MoM growth helps you understand if you’re continuously growing. If you grow every month, your growth compounds. Compounding growth is a powerful signal for businesses.
One of the key benefits of tracking month over month growth is the power of compounding. Even small, consistent month over month increases can lead to significant growth over time due to the compounding effect.
This makes MoM growth a powerful indicator of potential long-term success.
Compound monthly growth rate or the CMGR formula helps calculate the average month over month growth over a longer-term duration, typically 6-18 months.
Tracking MoM growth rates has limitations. For example, seasonality, public holidays, and weather events can all impact a simple month on month growth rate. Calculating the compound monthly growth rate is a way to smooth out simple month on month fluctuations by calculating the underlying true growth rate of the metric.
The formula for calculating CMGR is:
CMGR = Measurement in Last Month/Measurement in First Month 1/[Last Month – First Month] – 1
As an example, let’s say you are a mobile marketer who wants to measure the growth of total users MoM for the full year since you launched your app. You would use CMGR to find an average, versus calculating each month individually.
At the end of month one, for example, you only acquired 100 users but by the end of month 12, you had 5,000 active users. Here is how to calculate the CMGR in your situation:
CMGR = 5,000/100 1/[12 – 1] – 1
= 42.71%
Every month, on average, the number of active users increased by more than 42%. This is a total percentage increase of 4,900%. While 42% growth MoM is huge, the power of compounding becomes evident when you look back at the year and realize you grew 4,900%.
When calculating month over month (MoM) growth, it’s crucial to avoid common pitfalls that can lead to misinterpretation of data and misguided business decisions. Here are some key mistakes to watch out for and how to address them:
One of the most common pitfalls is placing too much emphasis on high percentage growth when dealing with small absolute numbers. While it’s exciting to see triple-digit growth rates, it’s important to contextualize these figures.
For example, growing from 10 to 30 users represents a 200% MoM growth rate, which sounds impressive. However, this growth may be due to random fluctuations or easily achievable through minimal effort. As absolute numbers increase, maintaining such high percentage growth becomes exponentially more challenging.
To avoid this pitfall:
Another common error is smoothing out inconsistent growth into a steady MoM growth rate. This can create a false sense of stability and predictability in your business model.
For instance, if your monthly active users (MAU) grow by 5% one month, 50% the next, then 2% the following month, it’s misleading to average these out and claim a steady MoM growth rate. This approach masks the volatility in your growth and can lead to overly optimistic projections.
To avoid this pitfall:
It’s tempting to model all growth as MoM percentage increases, but this can be misleading when your growth is actually linear (adding a constant number of users each month).
For example, if you’re consistently adding 1,000 new users per month, going from 10,000 to 11,000 users is a 10% increase, but going from 20,000 to 21,000 is only a 5% increase. Describing this as “decreasing MoM growth” misrepresents the steady progress you’re making.
To avoid this pitfall:
Many businesses experience seasonal fluctuations, and failing to account for these can lead to misinterpretation of MoM growth data. For example, an e-commerce site might see a significant spike in December due to holiday shopping, followed by a sharp decline in January.
To avoid this pitfall:
When calculating MoM growth, it’s easy to focus solely on new acquisitions and forget about churn. This can lead to an overly optimistic view of your growth trajectory.
For example, if you gain 1,000 new users but lose 800 existing users in a month, your retention is poor and hence growth is much smaller than the acquisition numbers suggest.
To avoid this pitfall:
The compound monthly growth rate (CMGR) can be a useful metric for smoothing out growth over longer periods. However, it’s often misused to make sporadic or inconsistent growth appear steady.
To avoid this pitfall:
External events, such as a viral marketing campaign, a major press mention, or changes in the industry, can significantly impact your MoM growth. Failing to account for these can lead to unrealistic expectations for future growth.
To avoid this pitfall:
By avoiding these common pitfalls, you can ensure that your MoM growth calculations provide accurate, actionable insights. Remember, the goal of tracking MoM growth isn’t just to see big numbers, but to gain a deep understanding of your business’s performance and trajectory.
Use the month over month growth calculator wisely, in conjunction with other relevant data points, to make informed decisions and drive sustainable growth for your business.
It is challenging to navigate your company’s mountainous range of data to find the metrics worth reporting on. This is why many people report on vanity metrics. Below are the three metrics we find most valuable for marketers to track:
Understanding your app’s retention rate is vital for your business’s longevity. Many businesses fail because they allocate the vast majority of their resources to acquiring new users, without making adequate investments and efforts to retain them.
Customer acquisition numbers can sometimes cover a steep decline in retention shortly thereafter, but unless retention is growing in parallel to acquisition, the losses from acquisition costs will begin to stack up quickly.
For example, if your customer acquisition cost exceeds your customer lifetime value as a result of a low retention rate, your business model will almost certainly fail. Similar to a physical product company losing money on every product manufactured is a basic unit economics blunder, losing small amounts of money on each user is a basic user economics no-no.
MoM churn rates can be used to monitor the performance of recent feature releases, updates, bugs, and engagement tactics. If you notice a drastic increase in churn, it could be a signal that a recent change has disappointed customers, driving them away from your app.
On the other hand, a retention rate that grows MoM is one of the strongest indicators of a sustainable business. But no matter how small your churn rate is, it’s important to understand what may have caused users to leave.
Try Now: Free Customer Retention Rate Calculator by CleverTap
This metric will depend on your business’ KPIs.
Perhaps your app is built on the freemium model, but since your unpaid users still cost money, upgrading conversion rates to paid accounts is an important metric to track MoM.
Another popular conversion rate to track is opt-ins and sign-ups. For example, for a mobile marketer, the number of sign-up conversions is a north star metric to track MoM.
What monthly purchases are to the business team, monthly active users are to the product team. Strong monthly repeat revenue growth paired with MAU growth is one of the best indicators of a strong business model. This can also be a sign of a strong viral coefficient and growing network effects.
Month on month (MoM) refers to the change in a specific metric when comparing its value to the same metric from the previous month. It’s a way to measure short-term growth or decline in business performance.
You can also use the month over month growth calculator above. The month over month formula is as follows:
MoM Growth Rate = (Current Month Value – Previous Month Value) / Previous Month Value * 100
To calculate growth rate in Excel:
For example, if A1 contains 100 and B1 contains 110, the formula =(B1-A1)/A1 will return 0.1, which can be formatted as 10%.
For month-over-month growth across multiple periods:
Month over month (MoM) compares data from one month to the previous month. Year over year (YoY) compares data from one year to the same period in the previous year.
MoM growth rates offer valuable benefits such as providing early signals of performance trends and enabling teams to make timely course corrections. Tracking these metrics helps prevent missing quarterly or annual targets. However, it’s important to avoid overreacting to short-term MoM fluctuations and maintain focus on long-term goals and overall strategy.
Use our month over month calculator to instantly calculate growth rate or sign up for a demo (to help our MoM metrics) and learn how to use CleverTap’s all-in-one customer engagement platform.
See how today’s top brands use CleverTap to drive long-term growth and retention
