Net revenue retention (NRR)

Customers won during the period are left out. Gross revenue retention (GRR) uses the same cohort but ignores expansion, so it can never exceed 100%.

NRR shows whether customers get more value from you over time. A company with 120% NRR grows 20% a year before it signs a single new customer. NRR and net dollar retention (NDR) are used interchangeably, and companies define the details differently, so compare definitions before comparing numbers.

Example: on January 1 a company's customers pay $1,000,000 in ARR. Over the year those customers add $180,000 in upgrades and cross-sells, downgrade by $30,000 and churn $70,000. NRR = (1,000,000 + 180,000 - 30,000 - 70,000) / 1,000,000 x 100 = 108%. GRR, without expansion, is 90%.

For sales teams, NRR decides how much of next year's target new business has to carry. At 90% NRR the team has to replace 10% of last year's revenue before it grows at all. That's why many B2B companies give account managers and customer success teams expansion targets, and why outbound often targets new departments inside existing customers.