Gross Revenue Retention Rate (GRR) and Net Revenue Retention Rate (NRR) measure different aspects of customer revenue retention in SaaS businesses. GRR focuses purely on revenue retained from existing customers, excluding any expansion revenue from upsells, cross-sells, or price increases, and is always capped at 100% since it only measures what percentage of starting revenue is retained. NRR, in contrast, includes both retained revenue and any expansion revenue from existing customers, allowing it to potentially exceed 100% if expansion outpaces churn, providing a more complete picture of how customer relationships evolve over time.
A SaaS company should highlight Gross Revenue Retention when analyzing core product stickiness or evaluating the effectiveness of customer success initiatives aimed at reducing churn. For example, if a company implements a new onboarding program and sees their GRR increase from 85% to 92%, this clearly demonstrates improved base retention regardless of expansion activity. Alternatively, the same company would emphasize Net Revenue Retention when communicating with investors or demonstrating growth potential within the existing customer base. If the company has an NRR of 115% despite a GRR of only 90%, it shows that while they're losing 10% of their initial revenue to churn, the remaining customers are expanding their usage by 25%, resulting in net growth from the existing customer base alone—a powerful indicator of product-market fit and sustainable growth prospects.
