What is Net Revenue Retention (NRR)?
Net Revenue Retention (NRR) measures how recurring revenue from an existing customer base changes over time, including expansions, contractions, and churn. It’s a core metric for subscription businesses because it shows whether you can grow efficiently by retaining and expanding existing customers—not just relying on new sales.
How to Calculate NRR
A common formula is:
NRR (%) = (Starting MRR + Expansion MRR − Contraction MRR − Churned MRR) ÷ Starting MRR
If you start a month with $100k MRR, expand $15k, contract $5k, and churn $10k, then NRR = (100 + 15 − 5 − 10) ÷ 100 = 100%. That means your existing base stayed flat after accounting for everything.
NRR vs GRR
Gross Revenue Retention (GRR) excludes expansion. GRR answers “How much revenue did we keep?” while NRR answers “How much did the existing base grow or shrink?” Both matter: GRR reflects churn control and product reliability; NRR reflects overall growth efficiency in the installed base.
Why NRR Matters for GTM
- Growth efficiency: Higher NRR reduces the new bookings needed to grow.
- Unit economics: Expansion improves LTV and makes CAC more sustainable.
- Investor confidence: Strong NRR signals durable product value and expansion paths.
- Retention strategy: NRR highlights whether churn or contraction is offsetting expansion.
How to Improve Net Revenue Retention
- Reduce churn: Improve onboarding, adoption, and renewal planning.
- Reduce contraction: Align pricing to value and prevent shelfware.
- Create expansion paths: Clear tiers, add-ons, seats, or usage-based growth.
- Run value reviews: Tie product usage to measurable outcomes in QBRs.
- Segment and specialize CS: Different segments need different playbooks.
How AI Helps Improve NRR
AI can detect expansion opportunities and churn risk earlier by combining product usage, stakeholder signals, and conversation insights. This supports proactive customer success and more predictable renewals and upsells.
help_outlineFrequently Asked Questions
What does NRR above 100% mean?
NRR above 100% means expansion revenue from your existing customers is more than offsetting churn and contraction. In other words, your installed base is growing even before you add new customers.
What’s the difference between NRR and revenue growth?
NRR isolates how your existing customer base performs. Overall revenue growth combines both existing-base changes (NRR) and new customer acquisitions (new ARR).
Should we measure NRR monthly, quarterly, or annually?
Most SaaS teams track NRR monthly and quarterly, then also report rolling 12-month NRR for a smoother view. Choose the cadence that matches your billing and renewal cycles.
Can NRR be high while churn is still high?
Yes—especially if expansion is concentrated in a subset of customers. That’s why it’s important to track churn, contraction, GRR, and NRR together and segment results by customer size and cohort.