Terms

Net Revenue Retention (NRR)

Net Revenue Retention (NRR) is a metric that measures the percentage of revenue retained from existing customers over a specific period, accounting for revenue changes from expansions, upsells, downgrades, and churn. It offers a holistic view of customer health by revealing whether the revenue from your current customer base is growing or shrinking over time. This makes it a critical indicator of a subscription-based company's long-term viability and product-market fit.

Importance of Net Revenue Retention

NRR is a vital sign of a company's health, showing how well it retains and grows revenue from its existing customers. It directly reflects the value customers find in your product, making it a key indicator of future growth potential. A high NRR proves expansion revenue is outpacing losses from churn and downgrades.

Investors heavily rely on this metric to gauge a company's long-term viability and funding eligibility. Focusing on NRR is also more cost-effective than new customer acquisition. It helps teams identify and address retention issues early, ensuring sustainable success.

Strategies to Improve NRR

Improving Net Revenue Retention involves a multi-faceted approach focused on maximizing value for existing customers. By enhancing their experience and proactively addressing their needs, you can reduce churn and create expansion opportunities. Key strategies include:

  • Expansion: Drive revenue growth by upselling and cross-selling additional features or higher-tier plans to your current customer base.
  • Onboarding: Personalize the initial user experience to ensure customers quickly understand and achieve value from your product.
  • Support: Offer proactive, self-service support options and invest in customer success to resolve issues before they lead to churn.
  • Feedback: Utilize tools like NPS and churn surveys to gather insights, identify at-risk accounts, and improve customer satisfaction.

Net Revenue Retention (NRR) vs. Gross Revenue Retention (GRR)

While both metrics track retained revenue, NRR and GRR offer different perspectives on a company's financial health and customer loyalty.

  • NRR: This metric includes revenue from expansions and upsells, providing a comprehensive view of revenue growth from existing customers. It's often preferred by enterprises focused on demonstrating account growth, but it can sometimes mask underlying churn issues if expansion is particularly strong.
  • GRR: This metric excludes expansion revenue, offering a pure measure of retention and clearly highlighting churn. It is useful for any company, including mid-market businesses, wanting to isolate and address retention problems without the influence of upsell-driven growth.

Common Challenges in Maintaining NRR

Maintaining a high Net Revenue Retention rate is a constant balancing act between retaining customers and expanding their accounts. Companies often struggle with direct revenue loss from churn and downgrades while simultaneously failing to capitalize on growth opportunities.

  • Attrition: Losing customers or having them downgrade to cheaper plans directly reduces your revenue base.
  • Stagnation: Failing to effectively upsell or cross-sell to existing customers limits growth from your current base.
  • Oversight: High expansion revenue can mask underlying churn issues, creating a false sense of security.

Impact of NRR on Business Growth

Net Revenue Retention is a powerful engine for sustainable business growth. A high NRR demonstrates that a company is successfully increasing the value of its existing customers over time, which has several profound impacts on its trajectory.

  • Valuation: Directly increases company valuation, as higher retention signals long-term health to investors.
  • Profitability: Boosts profitability by generating more revenue from existing customers, which is more cost-effective than new acquisition.
  • Stability: Creates predictable revenue streams, leading to greater financial stability and resilience.
  • Validation: Demonstrates strong product-market fit and high customer satisfaction, proving the value of your service.
  • Efficiency: Allows resources to be focused on product innovation and customer success rather than solely on acquisition efforts.

Frequently Asked Questions about Net Revenue Retention (NRR)

Can NRR be over 100%?

Yes, an NRR over 100% is a strong sign of health. It means revenue from expansions and upsells is greater than revenue lost from churn and downgrades, signaling strong customer satisfaction and product value.

What is considered a good NRR?

While benchmarks vary by industry, an NRR above 100% is considered good. Top-performing SaaS companies often report rates of 120% or higher, indicating significant growth from the existing customer base and strong product-market fit.

How is NRR different from customer lifetime value (LTV)?

NRR is a retrospective metric measuring retained revenue from a group of customers over a set period. In contrast, LTV is a forward-looking prediction of the total revenue a single customer will generate over their entire lifecycle.

Other terms

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Warm Outbound

Warm outbound is a sales strategy for contacting prospects who've shown interest in your brand through prior engagement, like website visits.

Warm Outbound

HubSpot

HubSpot is a customer relationship management (CRM) platform with tools for marketing, sales, and service, all aimed at helping businesses grow.

HubSpot

Outbound Sales

Outbound sales is when reps proactively contact potential customers through cold calls or emails to generate leads and build a sales pipeline.

Outbound Sales

Logo Retention

Logo retention is a key B2B metric that measures a company's ability to retain its customers, or 'logos,' over a specific period.

Logo Retention

Cross-Site Scripting

Cross-Site Scripting (XSS) is a web security vulnerability that allows attackers to inject malicious scripts into trusted websites.

Cross-Site Scripting

Customer Buying Signals

Customer buying signals are the actions, behaviors, or statements a prospect makes that indicate they are moving towards a purchase decision.

Customer Buying Signals

Ramp Up Time

Ramp-up time is the period a new hire takes to get fully up to speed and become a productive member of your go-to-market team.

Ramp Up Time

Firmographics

Firmographics are descriptive attributes of organizations, used to segment companies by characteristics like industry, size, and location.

Firmographics

LinkedIn Sales Navigator

LinkedIn Sales Navigator is a premium tool helping sales teams find and engage with the right leads and accounts on the LinkedIn network.

LinkedIn Sales Navigator

GDPR Compliance

GDPR compliance means following the EU's strict data protection laws to ensure the secure and lawful handling of personal data.

GDPR Compliance

Product Recommendations

Product recommendations are a marketing strategy that uses customer data to suggest relevant products, boosting sales and customer engagement.

Product Recommendations

Event Marketing

Event marketing is a strategy where brands engage directly with target audiences through live events like trade shows, conferences, or webinars.

Event Marketing

Annual Recurring Revenue (ARR)

Annual Recurring Revenue (ARR) is the predictable income a company expects to receive from its customers over a one-year period.

Annual Recurring Revenue (ARR)

Application Performance Management

Application Performance Management (APM) monitors and manages an application's performance, availability, and the experience of its end-users.

Application Performance Management

Buyer Intent Data

Learn about buyer intent data, including sourcing and interpreting buyer intent data, & key metrics in buyer intent analysis.

Buyer Intent Data

Sales Prospecting Software

Sales prospecting software automates the process of finding, contacting, and tracking potential customers to help sales teams build their pipeline.

Sales Prospecting Software

Sales Operations Analytics

Sales operations analytics is the practice of analyzing sales data to improve the efficiency and effectiveness of the entire sales process.

Sales Operations Analytics

Data Appending

Data appending is the process of adding new data fields to your existing database records to enrich and complete your information.

Data Appending

De-dupe

De-duping, or data deduplication, is the process of eliminating duplicate copies of data within a dataset to improve accuracy and save space.

De-dupe

Demand Generation

Demand generation is the process of creating awareness and interest in your products to build a pipeline of qualified leads for your sales team.

Demand Generation

Sales Dashboard

A sales dashboard is a visual tool that centralizes and displays key sales data, metrics, and KPIs to help teams track performance and goals.

Sales Dashboard

Email Verification

Email verification is the process of confirming that an email address is valid and deliverable, which helps improve campaign performance.

Email Verification

Account

An account is a company or organization that you're targeting for sales. It can be a prospective, current, or even a past customer.

Account

Dynamic Pricing

Dynamic pricing is a strategy where businesses set flexible prices for products or services based on current market demands and other factors.

Dynamic Pricing

Buyer Intent

Learn about buyer intent, including understanding buyer intent signals, strategies to capture buyer intent, & buyer intent vs. customer interest.

Buyer Intent

Sales Demo

A sales demo is a presentation where a sales rep shows a prospect how a product or service works and solves their specific problems.

Sales Demo

Demand

Demand is the economic principle describing a consumer's desire and willingness to purchase a specific good or service at a particular price.

Demand

Objection Handling

Objection handling is the process of responding to a prospect's concerns or hesitations about a product or service to move a deal forward.

Objection Handling

Sales Development Representative (SDR)

A Sales Development Representative (SDR) is a sales specialist who finds and qualifies new leads, building a pipeline for the sales team.

Sales Development Representative (SDR)

Inside Sales

Inside sales is a remote sales process where reps sell products or services via phone, email, and other digital tools instead of in person.

Inside Sales

Cold Emailing

Cold emailing is sending unsolicited emails to potential customers you haven't contacted before, aiming to start a business conversation.

Cold Emailing

Load Testing

Load testing is a type of performance testing that determines how a system behaves under both normal and anticipated peak load conditions.

Load Testing

Buying Committee

A buying committee is a group of stakeholders within an organization who are jointly responsible for making major purchasing decisions.

Buying Committee

Contact Discovery

Contact discovery is the process of finding accurate contact details for potential leads, including names, emails, phone numbers, and job titles.

Contact Discovery

Marketing Qualified Lead (MQL)

A Marketing Qualified Lead (MQL) is a prospect who has shown interest based on marketing efforts but isn't yet ready for a sales conversation.

Marketing Qualified Lead (MQL)

Enterprise

An enterprise is a large-scale organization, often a corporation, defined by its complex structure and substantial number of employees.

Enterprise

B2B Data Enrichment

Learn about B2B data enrichment, including benefits of B2B data enrichment, implementing B2B data enrichment strategies, B2B data enrichment vs. data cleaning.

B2B Data Enrichment

AI Sales Script Generator

An AI sales script generator is a tool that uses artificial intelligence to create personalized sales scripts for any outreach scenario.

AI Sales Script Generator

Target Account List

A Target Account List (TAL) is a focused list of high-value companies that a business specifically aims to convert into customers.

Target Account List

B2B Data Erosion

Learn about B2B data erosion, including causes of B2B data decay, strategies to combat data erosion, & measuring the impact of data erosion.

B2B Data Erosion

FAB Technique

The FAB technique is a sales framework connecting product features to advantages and then to the specific benefits for the customer.

FAB Technique

Content Rights Management

Content Rights Management involves controlling the use and distribution of copyrighted digital media to protect intellectual property.

Content Rights Management

Channel Partners

Channel partners are third-party firms that help market and sell a company's products or services, acting as an indirect sales force.

Channel Partners

Representational State Transfer Application Programming Interface

A Representational State Transfer (REST) API is a web service that uses a simple, stateless architecture for systems to communicate online.

Representational State Transfer Application Programming Interface

Account-Based Sales

Account-Based Sales (ABS) is a focused B2B strategy where sales and marketing teams treat high-value accounts as individual markets of one.

Account-Based Sales

Order Management

Order management is the end-to-end process of tracking customer orders from placement to fulfillment, ensuring a seamless customer experience.

Order Management

Buyer

Learn about buyer, including identifying your ideal buyer, understanding buyer's journey, & evaluating buyer decision processes.

Buyer

Total Addressable Market (TAM)

Total Addressable Market (TAM) represents the maximum revenue a company can earn by selling its product or service in a specific market.

Total Addressable Market (TAM)

Average Revenue per User

Average Revenue per User (ARPU) is a key performance indicator that calculates the average revenue generated from each user or subscriber.

Average Revenue per User

Cross-Selling

Cross-selling is a sales tactic of encouraging customers to purchase products or services that are related to what they're already buying.

Cross-Selling

Persona Map

A persona map visually outlines a target customer, detailing their goals, behaviors, and pain points to help your team build genuine empathy.

Persona Map

Objection Handling in Sales

Objection handling in sales is the process of responding to a prospect's concerns about a product or service to move the deal forward.

Objection Handling in Sales

Business Development Representative

Learn about business development representative, including skills and qualifications for BDRs, & roles and responsibilities of a BDR.

Business Development Representative

Sales Calls

A sales call is a real-time conversation between a salesperson and a prospect, aiming to persuade them to purchase a product or service.

Sales Calls

Marketo

Marketo is a marketing automation platform used by B2B marketers to manage lead generation, nurturing, email marketing, and analytics.

Marketo

Intent-Based Leads

Intent-based leads are potential customers whose online actions—like searches or content engagement—signal a clear interest in buying a solution.

Intent-Based Leads

Site Retargeting

Site retargeting is a marketing strategy that shows ads to people who have previously visited your website but left without converting.

Site Retargeting

Customer Relationship Marketing

Customer relationship marketing is a strategy for building lasting connections with customers to foster long-term loyalty and engagement.

Customer Relationship Marketing

Scrum

Scrum is an agile framework that helps teams structure and manage their work through a set of values, principles, and practices.

Scrum

Buying Criteria

Buying criteria are the specific requirements and standards a customer uses to evaluate products or services before making a decision.

Buying Criteria

Social Proof

Social proof is a psychological phenomenon where people assume the actions of others reflect correct behavior for a given situation.

Social Proof

Marketing Attribution Model

A marketing attribution model is a framework for assigning credit to the marketing touchpoints that lead a customer to convert.

Marketing Attribution Model

Rollback Procedures

Rollback procedures are a set of steps to restore a system to a previous, stable version after a failed update, ensuring minimal disruption.

Rollback Procedures

Lead Nurturing

Lead nurturing is the process of developing and reinforcing relationships with buyers at every stage of the sales funnel.

Lead Nurturing

Sales Partnerships

Sales partnerships are strategic alliances where two companies co-sell products to expand their reach, generate new leads, and increase revenue.

Sales Partnerships

Commission

A commission is a service charge paid to an agent for a transaction. It's typically a percentage of the sale, rewarding performance directly.

Commission

B2B Intent Data

Learn about B2B intent data, including how B2B intent data enhances sales strategies, sources of B2B intent data, leveraging B2B intent data for competitiveness.

B2B Intent Data

AI Data Enrichment

AI data enrichment uses artificial intelligence to automatically enhance and update raw data, making it more complete, accurate, and valuable.

AI Data Enrichment

Point of Contact

A Point of Contact (POC) is the designated individual or department that serves as the main hub for information and communication on a matter.

Point of Contact

Marketing Qualified Opportunity

A Marketing Qualified Opportunity (MQO) is a lead vetted by marketing as a genuine sales opportunity, ready for direct sales follow-up.

Marketing Qualified Opportunity

Pipeline Coverage

Pipeline coverage is a key sales metric. It's the ratio of your total open pipeline value to your sales quota for a specific period.

Pipeline Coverage

Affiliate Marketing

Affiliate marketing is a performance-based model where affiliates earn a commission for promoting another company’s products or services.

Affiliate Marketing

Revenue Forecasting

Revenue forecasting is the process of estimating a company's future revenue, using historical data and market trends to guide strategic planning.

Revenue Forecasting

B2B Data

Learn about B2B data, including sources and types of B2B data, leveraging B2B data for sales success, & ensuring the accuracy of B2B data.

B2B Data

Sales Engineer

Sales Engineers blend deep technical knowledge with sales acumen, demonstrating a product's value and solving customer problems to drive revenue.

Sales Engineer

Microservices

Microservices is an architecture where apps are built as a collection of small, independent services that communicate with each other over APIs.

Microservices

Elevator Pitch

An elevator pitch is a short, memorable summary of what you do, designed to be delivered in the time it takes to ride an elevator.

Elevator Pitch

Chatbots

Chatbots are AI-powered programs that simulate human conversation. They interact with users via text or voice, typically for customer support.

Chatbots

Performance Plan

A performance plan is a formal document outlining an employee's goals, expectations, and metrics for success over a specific period.

Performance Plan

Lead Enrichment Tools

Lead enrichment tools are platforms that automatically add missing data to your leads, like contact info, firmographics, and buying signals.

Lead Enrichment Tools

User Interface

A User Interface (UI) is the point where humans and computers interact. It encompasses all visual elements like screens, icons, and buttons.

User Interface

Competitive Intelligence (CI)

Competitive intelligence (CI) is the ethical gathering and analysis of market data to inform strategic business decisions and gain an advantage.

Competitive Intelligence (CI)

Programmatic Display Campaign

Programmatic display campaigns use automation to buy and sell digital ad space in real-time, targeting specific audiences across the web.

Programmatic Display Campaign

Lead Scoring

Lead scoring is the process of assigning points to leads based on their attributes and actions to determine their sales-readiness.

Lead Scoring

Responsive Design

Responsive design is an approach where a website's layout adapts to the user's screen size, providing an optimal experience on any device.

Responsive Design

Mid-Market

Mid-market companies are businesses larger than small businesses but smaller than large enterprises, often defined by revenue or employee size.

Mid-Market

Applicant Tracking System

An Applicant Tracking System (ATS) is a software application that manages your entire hiring and recruitment process from a single dashboard.

Applicant Tracking System

SEO

SEO, or Search Engine Optimization, is increasing the quantity and quality of traffic to your website through organic search results.

SEO

Stress Testing

Stress testing is a type of software testing that determines a system's robustness by pushing it beyond its normal operational capacity.

Stress Testing

Closed Won

Closed Won is a CRM status for a sales deal that has been successfully concluded, resulting in a signed contract and a new customer.

Closed Won

B2B Marketing Attribution

Learn about B2B marketing attribution, including challenges in B2B marketing attribution, & key metrics for effective attribution.

B2B Marketing Attribution

Request for Information

A Request for Information (RFI) is a formal process for gathering information from potential suppliers before issuing a more detailed proposal.

Request for Information

Sales Funnel

A sales funnel is a model illustrating the customer's journey from initial awareness to the final purchase, narrowing down leads at each stage.

Sales Funnel

Monthly Recurring Revenue (MRR)

Monthly Recurring Revenue (MRR) is the predictable, recurring income a business expects to receive each month from all active subscriptions.

Monthly Recurring Revenue (MRR)

Net New Business

Net new business is revenue from customers who have never purchased from your company before. It’s a crucial indicator of sustainable growth.

Net New Business

Closed Lost

Closed Lost is a sales term for a deal that didn't go through. The prospect decided not to buy, or the sales team disqualified them.

Closed Lost

RESTful API

A RESTful API is a web service interface that uses HTTP requests to access and use data, adhering to the constraints of REST architecture.

RESTful API

Predictive Lead Generation

Predictive lead generation uses data and AI to find prospects most likely to buy, helping teams focus their efforts on high-value leads.

Predictive Lead Generation

Bounce Rate

Learn about bounce rate, including understanding bounce rate implications, key factors affecting bounce rate, & reducing your bounce rate effectively.

Bounce Rate

Progressive Web Apps

Progressive Web Apps (PWAs) are websites that look and feel like native mobile apps, offering features like offline access and push notifications.

Progressive Web Apps