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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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)

Omnichannel Sales

Omnichannel sales is a strategy that integrates all physical and digital sales channels to create a seamless, unified customer experience.

Omnichannel Sales

Triggered Email

A triggered email is an automated message sent to a user in response to a specific action or event, like signing up or making a purchase.

Triggered Email

CRM Analytics

CRM analytics is the process of analyzing data from your CRM to uncover insights that help you better understand and serve your customers.

CRM Analytics

OAuth

OAuth is an open standard for access delegation. It lets you grant apps access to your data on other services without sharing your password.

OAuth

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

Demand Capture

Demand capture is the strategy of engaging potential customers who are already actively looking for a solution that your company provides.

Demand Capture

Marketing Metrics

Marketing metrics are quantifiable values that marketing teams use to measure and track the performance of their campaigns and efforts.

Marketing Metrics

Customer Retention Rate

Customer Retention Rate (CRR) is the metric that measures the percentage of customers a company has kept over a specific period of time.

Customer Retention Rate

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

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

Employee Advocacy

Employee advocacy is the promotion of an organization by its staff members, who share positive messages and content through their personal networks.

Employee Advocacy

Gamification

Gamification applies game mechanics like points, badges, and leaderboards to non-game activities to boost engagement and motivate users.

Gamification

Buyer Intent

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

Buyer Intent

Account Development Representative

An Account Development Representative (ADR) identifies and qualifies new business opportunities, creating a pipeline for account executives.

Account Development Representative

Jobs to Be Done Framework

The Jobs to Be Done (JTBD) framework focuses on understanding customer needs by identifying the specific 'job' they are trying to accomplish.

Jobs to Be Done Framework

Sales Operations Key Performance Indicators

Sales Operations KPIs are measurable metrics that track the efficiency and effectiveness of a sales team's operational processes.

Sales Operations Key Performance Indicators

Sales Sequence

A sales sequence is a series of automated touchpoints sent to prospects over time to guide them through the sales funnel.

Sales Sequence

Internal signals

Internal signals are data points from your own systems, like website visits or product usage, that indicate a customer's buying intent.

Internal signals

Sales Rep Training

Sales rep training is the process of equipping your sales team with the skills, knowledge, and tools to effectively sell and hit their targets.

Sales Rep Training

Firmographics

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

Firmographics

Analytics Platforms

Analytics platforms are tools that collect and analyze data from various sources, helping businesses track key metrics and make informed decisions.

Analytics Platforms

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

Hybrid Sales Model

A hybrid sales model blends traditional and digital sales methods to engage customers across multiple channels and buying preferences.

Hybrid Sales Model

Inbound leads

Inbound leads are potential customers who proactively reach out after finding your business through content, social media, or search.

Inbound leads

Account Management

Account management is the post-sales practice of building and nurturing long-term relationships with a company's most valuable clients.

Account Management

Low-Hanging Fruit

Low-hanging fruit are the most obvious and easy-to-tackle tasks or goals that provide a quick, valuable return for minimal effort.

Low-Hanging Fruit

Proof of Concept

A Proof of Concept (PoC) is a small exercise to test whether a business idea or project is technically feasible and has real-world potential.

Proof of Concept

Business to customer

Learn about business to customer, including maximizing B2C sales strategies, B2C vs. B2B: unveiling differences, & core principles of B2C success.

Business to customer

Integration Testing

Integration testing is a software testing phase where individual modules are combined and tested together to verify their interaction.

Integration Testing

Sales Quota

A sales quota is a time-bound sales goal for a rep or team, measured in revenue or units sold, to be met within a specific period.

Sales Quota

Sender Policy Framework

Sender Policy Framework (SPF) is an email authentication method that lets you specify which mail servers can send emails on behalf of your domain.

Sender Policy Framework

Subject Matter Expert

A Subject Matter Expert (SME) is an individual with profound knowledge and authority in a particular area, topic, or industry.

Subject Matter Expert

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

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

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

Mobile Compatibility

Mobile compatibility ensures your site or app works flawlessly on mobile devices, like smartphones and tablets, for a seamless user experience.

Mobile Compatibility

Fault Tolerance

Fault tolerance is a system's ability to continue operating without interruption when one or more of its components fail.

Fault Tolerance

Value-Added Reseller

A Value-Added Reseller (VAR) is a company that adds features or services to an existing product, then resells it as an integrated solution.

Value-Added Reseller

Marketing Analytics

Marketing analytics involves measuring and analyzing marketing data to understand campaign performance and improve return on investment (ROI).

Marketing Analytics

B2B Data Platform

Learn about B2B data platform, including key benefits of B2B data platforms, choosing the right B2B data platform, challenges in implementing B2B data platforms.

B2B Data Platform

CRM Enrichment

CRM enrichment is the process of adding third-party data to your existing customer profiles to make them more complete and accurate.

CRM Enrichment

Employee Engagement

Employee engagement is the emotional commitment an employee has to their organization, motivating them to contribute to the company's success.

Employee Engagement

Electronic Signatures

An electronic signature is a digital method for getting consent on electronic documents. It's a legally binding way to sign agreements online.

Electronic Signatures

Fulfillment Logistics

Fulfillment logistics is the entire process of getting an order to a customer, from storing inventory to picking, packing, and final shipment.

Fulfillment Logistics

Shipping Solutions

Shipping solutions are services or software that streamline the logistics of getting products to customers, from label printing to final delivery.

Shipping Solutions

Discount Strategies

Discount strategies are pricing tactics used to attract customers and boost sales by temporarily reducing the price of products or services.

Discount Strategies

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

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

C-Level or C-Suite

The C-suite, or C-level, refers to a company's most senior executives. Their titles usually start with 'Chief,' such as CEO, CFO, or CTO.

C-Level or C-Suite

Open Rate

The open rate is the percentage of recipients who opened an email. It's a primary indicator of a subject line's effectiveness.

Open Rate

Sales Enablement Platform

A sales enablement platform centralizes content, training, and analytics to help sales teams engage buyers and effectively close deals.

Sales Enablement Platform

Serviceable Obtainable Market

Serviceable Obtainable Market (SOM) is the portion of the market you can realistically capture with your current resources, sales, and marketing.

Serviceable Obtainable Market

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

Data-Driven Marketing

Data-driven marketing uses customer data to inform marketing decisions, optimize campaigns, and deliver personalized experiences to consumers.

Data-Driven Marketing

Conversion Rate

Conversion rate is the percentage of visitors who complete a desired goal, like a purchase or sign-up, out of the total number of visitors.

Conversion Rate

Outside Sales

Outside sales reps sell products/services in person, traveling to meet clients and close deals face-to-face, outside of a traditional office.

Outside Sales

Lead Management

Lead management is the process of capturing, nurturing, and qualifying leads to guide them from initial interest to sales-ready.

Lead Management

Closed Question

A closed question is a type of query that elicits a simple, often one-word answer like 'yes' or 'no,' or a specific, factual response.

Closed Question

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

Sales Pipeline Velocity

Sales pipeline velocity is a metric that measures how quickly deals move through your sales funnel to generate revenue for your business.

Sales Pipeline Velocity

Lead Velocity Rate

Lead Velocity Rate (LVR) is the growth rate of your qualified leads, measured month-over-month. It's a key indicator of future revenue.

Lead Velocity Rate

No Spam

“No Spam” is a commitment to sending only relevant, solicited messages. It means avoiding bulk, unwanted emails to respect the recipient's inbox.

No Spam

Forward Revenue

Forward revenue is the total value of all active, committed contracts that are expected to be recognized as revenue in the future.

Forward Revenue

Consumer

A consumer is an individual or entity that buys products or services for personal use, not for resale. They are the final user in a supply chain.

Consumer

Lead Generation Software

Lead generation software helps businesses automate finding and capturing potential customers' contact information to build sales pipelines.

Lead Generation Software

NoSQL

NoSQL ("Not only SQL") databases offer a flexible alternative to relational models, excelling at managing large and unstructured data sets.

NoSQL

Dark Funnel

The Dark Funnel describes customer buying activities that are untrackable by companies, such as private chats and word-of-mouth referrals.

Dark Funnel

Solution Selling

Solution selling is a sales approach focused on understanding a customer's pain points to offer a comprehensive solution, not just a product.

Solution Selling

Accessibility Testing

Accessibility testing is a software testing method that verifies an application is usable by people with disabilities, like vision or hearing loss.

Accessibility Testing

XML

XML (Extensible Markup Language) is a markup language for encoding documents in a format that is both human-readable and machine-readable.

XML

Sales Dialer

A sales dialer is software that automates outbound calling for sales teams, allowing reps to connect with more prospects in less time.

Sales Dialer

Average Revenue per Account

Average Revenue per Account (ARPA) is the average revenue generated from each customer account, usually measured on a monthly or annual basis.

Average Revenue per Account

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)

Lead Generation Tactics

Lead generation tactics are the strategies and methods used to attract potential customers and convert them into leads for your sales team.

Lead Generation Tactics

Soft Sell

A soft sell is a low-pressure sales tactic that uses subtle persuasion and relationship-building to gently guide customers toward a purchase.

Soft Sell

Dialer

A dialer is software that automatically dials phone numbers for agents, boosting call efficiency and connecting them to live prospects faster.

Dialer

Call for Proposal

A Call for Proposal (CFP) is a document that solicits proposals, often through a bidding process, for a specific project or service.

Call for Proposal

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

Buyer Behavior

Learn about buyer behavior, including understanding the buyer's journey, influencing factors in buyer behavior, & buyer behavior and marketing strategy.

Buyer Behavior

Price Optimization

Price optimization is the process of finding the ideal price for a product or service to maximize profitability or other business objectives.

Price Optimization

Psychographics

Psychographics categorizes people by their attitudes, interests, and lifestyles, revealing the 'why' behind their purchasing decisions.

Psychographics

Search Engine Results Page

A Search Engine Results Page (SERP) is the page displayed by a search engine after a user enters a query, listing results ranked by relevance.

Search Engine Results Page

Email Deliverability

Email deliverability is the ability for your emails to successfully land in your recipients' inboxes instead of their spam folders.

Email Deliverability

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

Data Warehousing

Data warehousing is the process of storing and managing large sets of data from various sources for business intelligence and reporting purposes.

Data Warehousing

Compounded Annual Growth Rate

Compounded Annual Growth Rate (CAGR) measures the mean annual growth of an investment over a specified period of time longer than one year.

Compounded Annual Growth Rate

Data Mining

Data mining is the process of discovering patterns, trends, and useful information from large datasets to make better business decisions.

Data Mining

Buyer Intent Data

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

Buyer Intent Data

Customer Lifecycle

The customer lifecycle is the journey a person takes from first becoming aware of your brand to becoming a loyal, repeat customer.

Customer Lifecycle

Renewal Rate

Renewal rate is the percentage of customers who renew their subscriptions or contracts at the end of their service period.

Renewal Rate

Always Be Closing

“Always Be Closing” (ABC) is a sales mantra meaning every action a salesperson takes should be with the ultimate goal of closing the sale.

Always Be Closing

Sales Acceleration

Sales acceleration refers to strategies and technologies designed to speed up the sales cycle, enabling reps to close more deals, faster.

Sales Acceleration

Time on Site

Time on site, or session duration, is a key web metric that tracks the total time a visitor spends on your website during a single visit.

Time on Site

Freemium Models

A freemium model offers a product's basic features for free, enticing users to upgrade to a paid version for more advanced capabilities.

Freemium Models

LPI

LPI, or Lead Per Inquiry, is a key metric that measures how many leads are generated from each inquiry in a marketing campaign.

LPI

Sales Demonstration

A sales demonstration is a presentation showing a prospect how a product or service works and how it can solve their specific problems.

Sales Demonstration

Bulk Application Programming Interface

Learn about bulk API, including how it works, the advantages of using it, common use cases, and tips for optimizing it.

Bulk Application Programming Interface

Sales Training

Sales training is the process of honing a salesperson's skills and knowledge to enhance their effectiveness and drive sales success.

Sales Training

Contact Data

Contact data is the set of details, like names, emails, and phone numbers, used to get in touch with a person or business for outreach.

Contact Data