GRR: Gross Revenue Retention

What is Gross Revenue Retention (GRR)?

Gross Revenue Retention (GRR) is a critical SaaS metric that shows how well a company maintains its existing revenue base without the benefit of expansion revenue. Unlike Net Revenue Retention (NRR), which includes upsells and cross-sells, GRR isolates your company's ability to simply hold onto the revenue you've already earned.

The formula for calculating GRR is:

GRR = (Starting MRR - Downgrades - Churn) / Starting MRR × 100%

Where:

• Starting MRR: Monthly Recurring Revenue at the beginning of the period
• Downgrades: Revenue lost from customers who reduced their spending
• Churn: Revenue lost from customers who canceled

A GRR of 90% means that, without any expansion revenue, you're retaining 90% of your starting revenue from existing customers over the measured period.

Why Gross Revenue Retention Matters

The Baseline of Business Health

GRR serves as the foundation of your business health. While NRR gets more attention because it can exceed 100% with expansion revenue, GRR tells you something arguably more fundamental: how sticky your core product is. A healthy GRR indicates that your product delivers enough value that customers maintain their base level of service.

Revealing Product and Customer Success Issues

A declining GRR is often the first indicator of underlying problems with your product-market fit, customer success programs, or competitive positioning. Since it isolates retention without the masking effect of expansion revenue, GRR can reveal issues that might otherwise be hidden by successful upselling to a subset of customers.

Investor Focus

Investors pay close attention to GRR because it represents the stability of your revenue foundation. While high NRR might impress, sophisticated investors know that sustainable business growth requires a solid GRR. According to OpenView's 2023 SaaS Benchmarks Report, gross revenue retention has declined 5-13% depending on company size, putting additional pressure on companies to focus on this metric.

Industry Benchmarks for Gross Revenue Retention

The "good" range for GRR varies by business model and customer segment:

• Enterprise SaaS: 90-95% annual GRR is considered strong
• Mid-market SaaS: 85-90% annual GRR is typically healthy
• SMB or B2C SaaS: 80-85% annual GRR may be acceptable due to higher natural churn rates

Top-performing SaaS companies aim for 90%+ GRR regardless of segment, as anything below 80% annually generally signals significant retention problems that require immediate attention.

How to Improve Your Gross Revenue Retention

Enhance Onboarding and Product Adoption

The first 90 days are critical for long-term retention. Create a structured onboarding process that ensures customers quickly reach their "aha moment" and see clear value from your product.

Implement Proactive Customer Success

Don't wait for customers to reach out with problems. According to data from Upollo, customers who use proactive retention strategies retain twice as many customers as those who only react to churn after it happens. Set up health scores and regular check-ins to identify at-risk accounts before they consider leaving.

Invest in Product Quality and Roadmap

Continuous product improvement is essential for retention. Regularly collect customer feedback and prioritize fixing the issues that cause friction or frustration. Align your product roadmap with solving your customers' evolving needs.

Create Switching Costs Through Integration

Make your product an essential part of your customers' workflows by integrating with their other tools. The more embedded your solution is in their tech stack, the higher the switching costs will be.

Common Mistakes When Managing GRR

Focusing Too Much on NRR at the Expense of GRR

While NRR is important, companies sometimes mask declining GRR by aggressively upselling a small portion of their customer base. This creates an unstable revenue structure that can collapse when expansion opportunities are exhausted.

Failing to Segment GRR Analysis

Overall GRR can hide problems in specific customer segments. Break down your GRR analysis by customer size, industry, product line, and acquisition channel to identify where retention issues are occurring.

Mistaking Price Increases for Good Retention

If you raise prices for existing customers, it may temporarily boost your apparent retention metrics. However, this isn't the same as genuine product stickiness and can accelerate churn in the long run if not accompanied by increased value.

Gross Revenue Retention vs. Net Revenue Retention

Understanding the difference between these two metrics is crucial:

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GRR can never exceed 100%, while successful companies can achieve NRR well above 100% through effective expansion strategies. However, even companies with impressive NRR numbers should maintain a healthy GRR to ensure sustainable growth.

Gross Revenue Retention vs. Net Revenue Retention

Understanding the difference between these two metrics is crucial:

Gross Revenue Retention (GRR)

• Formula: (Starting MRR - Downgrades - Churn) / Starting MRR × 100%
• What It Shows: Base revenue stability without expansion
• Typical Range: 80-95%

Net Revenue Retention (NRR)

• Formula: (Starting MRR + Expansion - Downgrades - Churn) / Starting MRR × 100%
• What It Shows: Overall revenue momentum including expansion revenue
• Typical Range: 90-120+%

GRR can never exceed 100%, while successful companies can achieve NRR well above 100% through effective expansion strategies. However, even companies with impressive NRR numbers should maintain a healthy GRR to ensure sustainable growth.