Net Revenue Retention Measure

A Net Revenue Retention Measure is a recurring revenue retention measure that quantifies the net revenue change from existing customers including expansion revenue, contraction revenue, and churn revenue over a measurement period.

• AKA: NRR Measure, Net Dollar Retention, NDR Metric, Revenue Retention Rate.
• Context:
  • It can typically measure Revenue Expansion Performance through net revenue retention calculations.
  • It can typically assess Customer Value Growth through net revenue retention tracking.
  • It can typically indicate Product Stickiness through net revenue retention stability.
  • It can typically validate Land-and-Expand Strategy through net revenue retention improvements.
  • It can typically benchmark SaaS Business Health through net revenue retention comparisons.
  • ...
  • It can often identify Pricing Power through net revenue retention expansion.
  • It can often reveal Customer Segment Dynamics through net revenue retention variance.
  • It can often predict Future Growth Potential through net revenue retention trends.
  • It can often inform Investment Decisions through net revenue retention metrics.
  • ...
  • It can range from being a Negative Net Revenue Retention Measure to being a Positive Net Revenue Retention Measure, depending on its net revenue retention direction.
  • It can range from being a Sub-100% Net Revenue Retention Measure to being an Above-120% Net Revenue Retention Measure, depending on its net revenue retention magnitude.
  • It can range from being a Monthly Net Revenue Retention Measure to being an Annual Net Revenue Retention Measure, depending on its net revenue retention period.
  • It can range from being a Cohort-Based Net Revenue Retention Measure to being a Aggregate Net Revenue Retention Measure, depending on its net revenue retention calculation method.
  • ...
  • It can include Expansion Revenue Components from seat expansion, module attachment, and pricing increases.
  • It can include Contraction Revenue Components from seat reduction, downgrade, and discounts.
  • It can include Churn Revenue Components from customer cancellations and non-renewals.
  • It can be calculated as starting MRR plus expansion minus contraction minus churn divided by starting MRR.
  • ...
• Example(s):
  • SaaS Net Revenue Retention Measures, such as:
    • Enterprise SaaS NRR Measure showing 120%+ net revenue retention performance.
    • SMB SaaS NRR Measure showing sub-100% net revenue retention performance.
  • Segment-Specific Net Revenue Retention Measures, such as:
    • Mid-Market NRR Measure for mid-size company customers.
    • Product Bundle NRR Measure for bundled subscription offerings.
  • Time-Period Net Revenue Retention Measures, such as:
    • Quarterly NRR Measure for quarterly business reviews.
    • Annual NRR Measure for annual performance assessments.
  • Industry-Specific Net Revenue Retention Measures, such as:
    • Legal Tech NRR Measure showing 102% overall retention.
    • Cloud Infrastructure NRR Measure showing 130%+ expansion-driven growth.
  • ...
• Counter-Example(s):
  • Gross Revenue Retention Measure, which excludes expansion revenue from calculation.
  • Customer Retention Rate, which measures customer count rather than revenue value.
  • Annual Recurring Revenue (ARR), which measures total revenue rather than retention rate.
  • Customer Acquisition Cost (CAC), which measures new customer cost rather than existing customer value.
• See: Gross Revenue Retention, Customer Churn Rate Measure, Revenue Management Task, SaaS Business Model, Customer Lifetime Value, Average Revenue Per User (ARPU) Measure, Subscription Business Performance.

---