NRR: The King of B2B SaaS KPIs
Net Revenue Retention (NRR) measures the evolution of revenue generated by a cohort of existing customers over a period, including expansion (upsell & cross-sell), downsell, and churn.
An NRR > 100% means your expansion revenue compensates for churn.
For example, a cohort starts at €100K MRR. Over 12 months, you generate €20K in expansion, €2K in downsell, and €5K in churn.
Your cohort ends at €113K MRR, which is an NRR of 113%, and you generated 13% additional revenue without acquisition.
Table of Contents
What is NRR?
Net Revenue Retention (NRR), also called Net Dollar Retention (NDR), is an essential SaaS metric that measures the evolution of revenue generated by a cohort of existing customers over a given period (typically 12 months).
Unlike overall growth rate (ARR Growth), NRR excludes new customers and focuses solely on your ability to:
- Retain your existing customers (avoid churn)
- Grow their revenue via upsells (plan upgrades)
- Sell complementary products (cross-sells, add-ons)
- Minimize downsells
Why is NRR crucial for SaaS?
An NRR above 100% means your expansion revenue (upsells + cross-sells) largely compensates for churn and downsells. You generate growth without acquisition, which improves your capital efficiency and reduces your dependence on fundraising.
Investors favor SaaS companies with high NRR because this metric demonstrates:
- Validated Product-Market Fit: your customers see value and accept to pay more
- Revenue Predictability: your installed base generates organic growth
- Capital Efficiency: CAC amortized over growing revenue (improves LTV:CAC ratio)
- Scalability: growth doesn't depend solely on acquisition
NRR Benchmarks by Segment
NRR varies significantly according to the targeted customer segment. Enterprise SaaS companies naturally display higher NRR thanks to strong expansion potential and structurally low churn.
| Segment | ACV | NRR | Characteristic |
|---|---|---|---|
| Consumer B2C | - | 60-80% | High churn, low propensity for expansion |
| SMB B2B | < €10k | 80-100% | High churn (5-7% monthly), limited expansion, low propensity to upsell |
| Mid-Market | €10-100k | 100-110% | Controlled churn (2-4% monthly), moderate expansion via add-ons and seats |
| Enterprise | > €100k | 110-130% | Very low churn (< 1% monthly), strong multi-product expansion potential |
| Best-in-Class | > €100k | 130-160%+ | Usage-based pricing, multi-product strategy, natural expansion |
Source: SaaStr, OpenView Partners, Bessemer (2024)
Examples of Public SaaS Companies (2024 data)
Publicly traded SaaS companies that disclose their NRR help identify excellence benchmarks by segment:
Data Cloud Enterprise | Usage-based pricing favors natural expansion
Communication API | Usage-based pricing (pay per API call, SMS, voice)
Monitoring & Observability | Multi-product with strong cross-sell adoption
Database Platform | Expansion via usage + migration to premium tiers
Video Communications | Seat expansion + add-on modules
Customer Support | Mid-Market + Enterprise with seat upsells
Track Your NRR Automatically
Interpreting Your NRR
> 120%: Excellence
Your expansion revenue generates 20% additional revenue on your installed base. Typical profile: Enterprise SaaS with usage-based pricing, multi-product strategy, or strong propensity to upsell via adoption of premium features.
100-120%: Healthy
Your expansion revenue compensates for churn. You generate positive organic growth without depending on acquisition. Improvement areas: identify upsell opportunities via usage analysis, create higher tiers, or strengthen Customer Success.
< 100%: Problematic
Your customer base is contracting: churn and downsells exceed expansion revenue, requiring more and more acquisition to maintain growth. Common causes: high churn (> 5% monthly), no expansion strategy, unoptimized pricing, or non-existent Customer Success. Immediate actions: analyze churn by cohort, strengthen onboarding (Time-to-Value < 30 days), create upgrade incentives via feature gating, and hire a Customer Success Manager.
Levers to Improve NRR
Improving your NRR rests on two pillars: reducing contraction (minimizing churn and downsell) and maximizing expansion revenue (generating expansion via upsell & cross-sell).
Reduce Churn
Each point of churn avoided immediately improves your NRR. Going from 5% to 3% monthly churn equals +24% annual NRR.
Actionable Steps
- Strengthened Onboarding: reduce Time-to-Value to less than 30 days to quickly reach the "aha moment" (customers who achieve this have 3x less churn)
- Proactive Customer Success: organize quarterly QBRs for accounts > €10k ACV to anticipate needs before churn
- Early Warning Signals: continuously track product usage (a customer using < 50% of features is at risk of churn within 90 days)
- Exit Interviews: analyze churn reasons by cohort to correct structural issues and improve the product
Seats Expansion
Increase the number of users within the same customer company. This model works with per-seat pricing (per-user pricing).
Actionable Steps
- Facilitate User Addition: create an intuitive self-service interface allowing seats to be added in a few clicks
- Encourage Team Adoption: offer collective onboarding sessions to promote adoption within teams
- Volume Discount: offer gradual discounts (10 users = -10%, 50 users = -20%) to incentivize expansion
Feature Expansion
Upgrade customers to higher plans with more features. This model relies on tiered pricing (Starter, Pro, Enterprise plans).
Actionable Steps
- Create an Upgrade Wall: block premium features (advanced reporting, API, integrations) in lower plans to create natural incentive
- Offer Trials: provide 14 days free of the higher plan to demonstrate the value of premium features
- Use Usage Stats: send contextual alerts ("You've used 80% of your quota, upgrade to Pro for more capacity")
Usage Expansion
Generate passive expansion through increased customer consumption. This model applies to SaaS with usage-based pricing.
Actionable Steps
- Encourage Usage: regularly send emails with tips & tricks to maximize product usage
- Implement Soft Limits: avoid hard blocks (which frustrate) and prefer automatic overcharges beyond quota
- Usage Dashboard: create a dashboard showing the value created through product usage
Common Expansion Strategies
Beyond operational levers, certain business strategies enable structurally maximizing your NRR. These approaches often require an overhaul of your business model or pricing.
Land & Expand
This strategy consists of entering small with the customer with an accessible entry plan, then growing with them as adoption increases. The idea is to facilitate initial acquisition (low friction) and rely on natural expansion via viral internal adoption.
Usage-based or user-based pricing favors this organic growth. For example, a team of 10 people starts with a Starter plan, then the entire company (500 people) progressively adopts the product, multiplying revenue by 50. This approach generates exceptional NRR when it works.
Usage-Based Pricing
With a usage-based pricing model, the customer pays according to actual consumption (API calls, SMS, storage, monitored hosts, etc.). Expansion then becomes passive: the more the customer uses the product, the more revenue increases automatically, without sales intervention.
This model perfectly aligns customer interests (only pay for what's used) and provider interests (growth linked to adoption). SaaS companies with usage-based pricing typically display very high NRR (140-160%), as expansion naturally follows customer growth.
Add-Ons & Modules
Rather than forcing customers to change plans, this strategy consists of selling complementary modules à la carte. The customer starts with a core product (e.g., Marketing Hub), then progressively adds other modules (Sales Hub, Service Hub, Operations Hub) according to their needs.
Each module is billed separately, allowing customers to compose their own stack. This approach generates progressive and predictable expansion, with high NRR as customers accumulate modules without ever downgrading.
Aggressive Customer Success
Proactive Customer Success systematically identifies expansion opportunities. Quarterly Business Reviews (QBRs) allow showing current ROI, identifying uncovered use cases, and proposing adapted features or plans.
Automating expansion triggers is also crucial: when a customer reaches 80% of their quota, an upgrade email is automatically sent. The challenge is to transform CS from a support function into a true expansion revenue engine, with clear NRR objectives.
Product-Led Growth
In a Product-Led Growth approach, the product itself sells the expansion. Soft limits (no hard blocking, but automatic overcharge) avoid frustration while generating expansion. In-app feature discovery (premium features displayed in gray with "Upgrade to unlock") creates natural incentive.
Teammate invitations promote viral internal adoption. This strategy drastically reduces the cost of acquiring expansion revenue, since the product does the sales work.
Pricing Strategy
Pricing structured for expansion is fundamental. Ideally, create 3-5 pricing tiers with sufficient headroom between each (2-3× gap). Strategic feature gating (advanced reporting, API, integrations reserved for premium plans) creates clear incentives to upgrade.
The entry-level plan should be accessible to facilitate acquisition, while higher tiers (Premium, Enterprise) must offer perceived value justifying the premium. Good pricing naturally facilitates expansion without requiring aggressive selling.
NRR vs GRR: What's the Difference?
NRR (Net Revenue Retention) and GRR (Gross Revenue Retention) both measure revenue retention, but with a fundamental difference: GRR excludes expansion revenue.
Gross Revenue Retention (GRR)
GRR measures only your ability to retain existing revenue, without accounting for upsells or cross-sells. It answers the question: "What percentage of initial MRR did I retain?"
Characteristics:
- Capped at 100% (doesn't include expansion)
- Indicator of product quality and Product-Market Fit
- Priority Early-stage (Pre-Seed/Seed)
Net Revenue Retention (NRR)
NRR includes expansion revenue (upsell & cross-sell) in addition to retention. It answers the question: "How much MRR did I generate on my installed base?"
Characteristics:
- Can exceed 100% thanks to expansion
- Indicator of scalability and growth potential
- Priority Growth-stage (Series A+)
Insight
Track both metrics. GRR validates your Product-Market Fit (target > 90%), while NRR demonstrates your organic growth potential (target > 110%). A healthy company displays both high GRR and NRR > 100%.