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Gross Retention Rate (GRR)

Finance

What is Gross Retention Rate?

Gross Retention Rate (GRR) is the percentage of MRR which was not Lost over a given period. It measures the portion of recurring revenue retained from existing customers over a period, excluding any upsell or expansion revenue. GRR is usually measured month-on-month and focuses only on revenue you keep, not revenue you gain.

How is Gross Retention Rate (GRR) used?

This metric is a great way to understand how sustainable your revenue streams are from a churn perspective. If you can see that your current customers continue to spend on your product, you can be more confident in your growth plans. A GRR of 90%+ over a year is considered good for a fast-growing company.

How to calculate Gross Retention Rate (GRR)

(Start of Period MRR - MRR Lost) / Start of Period MRR

To calculate GRR, subtract the Monthly Recurring Revenue (MRR) lost during the period from the MRR at the start of that period. Then, divide this result by the start of period MRR.

Best Practices

Regularly collect feedback to understand why customers churn or downgrade. Leading causes of churn are poor onboarding, weak customer relationship building, and poor customer service. So, be proactive with education and communication around your product. Invest in providing excellent customer service. If MRR is lost due to cost, consider revising your pricing or creating custom plans.

Common Misconceptions

GRR is not just about preventing customer churn; it also involves minimising revenue contractions from existing customers. This includes addressing factors like downgrades and reductions in usage.

"If your retention is poor then nothing else matters."

Brain Balfour
/
Founder/CEO of Reforge, former VP Growth at HubSpot

"Retention problems sneak up on you. You need to be actively monitoring retention cohorts even when retention is going up and to the right."

Dan Wolchonok
/
Former Director of Growth & Analytics at HubSpot

FAQs

What are the main drivers of Gross Retention Rate (GRR)?
  • Churn
  • Contraction
How should I break down Gross Retention Rate (GRR)?
  • Industry vertical
  • Geography
  • Company size
  • Product
  • Acquisition channel
  • Usage patterns

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