NRR meaning — Net Revenue Retention

What is NRR?

NRR (Net Revenue Retention) measures how much revenue you keep and grow from existing customers over a year, excluding anything new. Start with the recurring revenue from a cohort twelve months ago, add expansion, subtract contraction and churn, and divide by the starting figure. Above 100% means the existing base grew on its own — the business would expand even if it never signed another customer. That is why it is the metric investors weight most heavily: 120% NRR implies compounding without acquisition spend, while 85% means every new deal is partly refilling a leaking bucket. Benchmarks sit around 100-110% for SMB, 110-120% mid-market and 120%+ for best-in-class enterprise. NRR is also the clearest argument for treating renewal conversations as real sales conversations rather than admin.

When to use NRR

• Board and investor reporting
• Assessing whether growth is efficient or acquisition-dependent
• Setting customer success and account management targets

Real examples

• Cohort: $1M starting + $250K expansion − $50K contraction − $100K churn = $1.1M → 110% NRR.
• Benchmark: 100-110% SMB, 110-120% mid-market, 120%+ best-in-class enterprise.
• At 120% NRR the base grows 20% annually with zero new logos.

Common mistakes

• Including new-customer revenue, which turns NRR into a growth rate and hides retention entirely.
• Measuring by logo rather than by revenue, so a churned flagship account looks like one lost customer.
• Reporting NRR without gross retention, which conceals churn behind expansion.

Want to practice NRR live? Run a roleplay with an AI buyer.