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The metric investors ask about first — and what it compounds to over three years.
NRR above 100% means your existing customers are worth more this year than last, with no new acquisition at all. That single property is why it is the first metric investors ask about.
Upgrades, seats added, usage growth
Downgrades, seats removed
Customers who left entirely
Count only the cohort that existed at the start. Including customers acquired during the period is the most common way NRR gets reported far higher than it really is.
Above 100% the base grows without a single new customer. Left alone for three years, this cohort would be worth $106,121 — up from $100,000.
What the same cohort is worth in three years
| Includes expansion | Can exceed 100% | Tells you | |
|---|---|---|---|
| NRR | Yes | Yes | Whether the base grows on its own |
| GRR | No | No | How much you keep before upsell |
Both matter, and reporting only NRR is a common way to flatter a retention problem. A company with 115% NRR and 80% GRR is losing a fifth of its customers and covering it with expansion from the rest — impressive, and fragile if expansion stalls.
| Segment | Median NRR | Strong |
|---|---|---|
| Consumer | Under 90% | 100% |
| SMB SaaS | 95–100% | 110% |
| Mid-market | 100–110% | 120% |
| Enterprise | 110–120% | 130%+ |
Including customers acquired during the period. NRR measures one cohort over time — the customers you had twelve months ago, and what that same group is worth now. Adding new customers to the numerator produces a number that is not NRR and is always higher.
GOOD QUESTIONS
Above 100% is the threshold that matters — it means the base grows without new customers. 110% is strong, 120%+ is best-in-class. SMB products typically sit near 100%; enterprise products with seat-based expansion routinely exceed 120%.
NRR includes expansion revenue and can exceed 100%. GRR excludes it and never can — it measures pure retention. Reporting only NRR can hide a real churn problem being masked by upsell.
Take the MRR of the customers you had twelve months ago, add their expansion, subtract their contraction and churn, then divide by the starting figure. Customers acquired during the period must be excluded entirely.
Because it separates growth from acquisition. A company with 120% NRR grows 20% a year even if it never signs another customer, which makes its revenue far more predictable and far more valuable per dollar.