Revenue
Net Retention Rate (NRR)
Definition of
Net Retention Rate (NRR) is a metric used by businesses to measure the impact of customer retention on their revenue growth. It measures the percentage of revenue a business retains from existing customers, after factoring in churn (customer loss) and expansion (increased revenue from existing customers). For example, if a business has 100 customers at the beginning of the year and loses 10, but gains new revenue from the remaining 90 customers, their expansion revenue would be added to the 90 customers. If the total revenue from these customers at the end of the year is $500,000, and the revenue from the same customers at the beginning of the year was $450,000, then the NRR would be 11.1% ($500,000 - $50,000 expansion revenue / $450,000). A high NRR is a positive indicator of customer satisfaction and loyalty, as well as a predictor of long-term revenue growth for the business.
