Definition
Revenue retention is the percentage of recurring revenue a company keeps over a given period—after accounting for customer churn, downgrades, and contractions. It reflects how well a business retains and grows its existing customer base.
Why retention is more important than acquisition
In SaaS and subscription businesses, net revenue retention (NRR) is often the clearest indicator of product value, customer satisfaction, and long-term business health. If you can’t retain and grow your revenue from existing customers, new acquisition only hides a deeper problem.
Key retention metrics
- Gross Revenue Retention (GRR): Percentage of recurring revenue retained from existing customers, excluding expansions. Measures churn risk.
- Net Revenue Retention (NRR): Percentage of recurring revenue retained and expanded. Measures both stickiness and upsell effectiveness.
Formulas:
GRR = ((Starting MRR - Churned MRR) / Starting MRR) * 100
- Starting MRR = Revenue from existing customers at the beginning of the period
- Churned MRR = Revenue lost from downgrades or cancellations
- Excludes any upsells or expansion revenue
NRR = ((Starting MRR - Churned MRR + Expansion MRR) / Starting MRR) * 100
- Expansion MRR = Additional revenue from upsells, cross-sells, etc.
- Includes both retention and expansion
Why customers churn
- Product no longer solves their evolving problem
- Onboarding was weak, so usage never picked up
- Support gaps, outages, or bugs eroded trust
- Competitive pricing or better fit elsewhere
- Poor handoff between sales and CS
How high-retention teams operate
- Track value realization, not just usage
- Have tight feedback loops between CS, product, and sales
- Build out expansion plays (e.g. feature upsell, usage-based growth)
- Use account intelligence to detect churn risks early
- Equip CS with content and support to manage renewal conversations confidently
The enablement layer
It is a common misconception that retention is the customer success team’s job. However, sales, onboarding, support, and marketing all shape the post-sale experience.
- Does onboarding reinforce what was sold?
- Does your help center or AI assistant resolve real issues?
- Do your renewal decks speak to the customer’s outcomes?
Retention reflects how consistently your org delivers value, across teams, over time.
