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Revenue retention, also known as Net Revenue Retention (NRR), is a sales metric that calculates the recurring revenue generated from existing customers over a fixed period.
Revenue retention provides sales teams with better insight than other metrics because it is influenced by changes in revenue that come from activities like upselling and customer churn. It’s also a key metric for helping you understand whether your product or service engages and meets the needs of customers over time.
You can calculate revenue retention by using the following formula:
Revenue Retention = (Starting MRR – Downgrade MRR – Churn MRR + Upgrade MRR) / Base MRR x 100.
NRR shouldn’t be confused with Gross Revenue Retention (GRR) which is calculated by taking the total revenue generated at the end of a set period and dividing it by the revenue from the same customers at the start of the same period.
Revenue retention measures the ability of a company to maintain or increase its revenue from existing customers by preventing churn, upselling or cross-selling additional products or services, or through customer loyalty.
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