Gross retention
A metric that measures the percentage of recurring revenue retained from existing customers over a period, excluding any expansion revenue from upsells or cross-sells.
Gross retention, also known as Gross Revenue Retention (GRR), is a key performance indicator that measures a company's ability to retain revenue from its existing customer base. It calculates the percentage of recurring revenue kept over a specific period, accounting for revenue lost to customer churn or subscription downgrades. Crucially, this metric intentionally excludes any expansion revenue from upsells or cross-sells, providing a pure measure of customer satisfaction and product stickiness.
How Gross Retention Is Calculated
The calculation for GRR starts with the total recurring revenue from a customer cohort at the beginning of a period (e.g., a quarter or year). From this starting amount, any revenue lost from customers who canceled their subscriptions (churn) and revenue reductions from customers who downgraded their plans (contraction) are subtracted. This net amount is then divided by the starting revenue.
The formula is:
GRR = (Starting ARR - Churn ARR - Contraction ARR) / Starting ARR
For example, if a company starts a quarter with $200,000 in ARR, loses $8,000 to churn, and another $2,000 to downgrades, its gross retention is 95%. ($200,000 - $8,000 - $2,000) / $200,000. Because it excludes expansion revenue, the highest possible GRR is 100%.
Gross Retention vs. Net Retention
While both metrics measure revenue retention from existing customers, they answer different questions. Gross retention isolates a company's ability to hold onto its existing revenue without the lift from expansion. A high GRR, with best-in-class SaaS companies aiming for 90% or higher, indicates a healthy product that customers value and continue to use.
In contrast, Net Revenue Retention (NRR) includes expansion revenue. NRR can exceed 100%, which signals that revenue growth from existing customers outpaces losses from churn and contraction. While NRR is a powerful indicator of overall growth efficiency, GRR provides a more fundamental look at customer health. A strong GRR is the foundation for high NRR. A low GRR can signal underlying problems that expansion sales may be masking, making it a critical health metric for customer success teams to monitor.
Also known as: GRR, gross revenue retention
