Net Revenue Retention (NRR)

Net revenue retention is the percentage of recurring revenue you keep from your existing customer base over a given period, accounting for expansion (upsells and cross-sells), contraction (downgrades), and churn (cancellations).

NRR is widely considered the single most important metric for SaaS businesses because it tells you whether your customers are becoming more or less valuable over time. An NRR above 100% means your existing customers are growing faster than they’re churning — you’d still grow even if you stopped acquiring new customers entirely.

The formula is: NRR = (Starting MRR + Expansion - Contraction - Churn) / Starting MRR x 100. If you started the year with $1M MRR from a cohort of customers, and at year end that same cohort pays $1.1M (after accounting for some customers churning and others expanding), your NRR is 110%.

Benchmarks: top-performing B2B SaaS companies targeting mid-market and enterprise achieve 120-140% NRR. SMB-focused companies typically see 90-110% due to higher churn rates in that segment. Below 90% is a serious concern — you’re losing customers faster than you’re growing them.

For example, a company with 130% NRR effectively doubles its revenue from existing customers every 2.5 years without signing a single new deal. That’s the compounding power of strong net retention.

Improving NRR requires effort on both sides: reducing churn through better onboarding, support, and product experience, while increasing expansion through proactive customer success, usage-based pricing, and strategic upselling.

Analytics platforms help you track NRR by cohort, segment, and product line to understand which parts of your customer base are healthy and which need attention.