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Net Retention Rate (NRR)


What is Net Retention Rate?

Net Retention Rate (NRR) is the MRR growth rate excluding revenue from new customers. It measures the revenue retained from existing customers over a specific period, including upsells, cross-sells, downgrades, and churn.

How is Net Retention Rate (NRR) used?

This metric is commonly used to gauge how well you retain and grow your existing customer base. >100% is a great benchmark because it implies revenue is growing without considering new customers – this is called Net Negative Churn.

How to calculate Net Retention Rate (NRR)

(End of Period MRR - New Customer MRR) / Start of Period MRR

To calculate NRR, subtract the Monthly Recurring Revenue (MRR) from new customers from the end-of-period MRR, then divide by the start-of-period MRR.

Best Practices

NRR can be increased by decreasing MRR Lost from existing customers or increasing Expansion MRR. To decrease MRR Lost, regularly collect feedback to understand why customers churn or downgrade. Be proactive with education and communication around your product. Invest in providing excellent customer service. To increase Expansion MRR, focus on driving up-sells and cross-sells and experiment with tiered pricing models.

Common Misconceptions

NRR is sometimes undervalued compared to new customer acquisition metrics, but it's important for sustainable growth. Another common misconception is that NRR is about preventing churn. NRR also covers revenue expansion from existing customers and not just churn prevention.

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

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

"One of the best methods for retention I have found is continuing to add value after the sale. Silence is a Retention Killer."

Adam Toporek, Author and CS Expert


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

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