Gross revenue retention (GRR) measures the leak in your customer base. It takes the recurring revenue you had from existing customers at the start of a period and asks how much of it you still have, ignoring any upsells. Because expansion is left out, GRR can only stay level or fall: it caps at 100%.
Worked example
A company has four customers at the start of the year, with $2,000,000 of annual recurring revenue (ARR) between them. A year later:
| Customer | Starting ARR | Ending ARR | What happened | Counted for GRR |
|---|---|---|---|---|
| A | $800,000 | $900,000 | Expanded $100,000 | $800,000 |
| B | $600,000 | $500,000 | Contracted $100,000 | $500,000 |
| C | $200,000 | $0 | Churned | $0 |
| D | $400,000 | $800,000 | Expanded $400,000 | $400,000 |
| Total | $2,000,000 | $2,200,000 | $1,700,000 |
- GRR = $1,700,000 ÷ $2,000,000 = 85%. Equivalently, ($2,000,000 − $100,000 contraction − $200,000 churn) ÷ $2,000,000.
- NRR = $2,200,000 ÷ $2,000,000 = 110%, because it includes the $500,000 of expansion.
The base grew by 10%, yet the company lost 15% of its starting revenue to downgrades and churn. Expansion from A and D hid the losses from B and C.
Why GRR caps at 100%
GRR counts each customer at no more than its starting revenue. A customer that expands is counted at its starting amount; one that contracts is counted at its lower ending amount; one that churns counts as zero. So the best possible GRR is 100%, meaning no customer reduced or canceled anything.
That cap is the point of the metric. Expansion from one customer can't offset a downgrade at another, so GRR shows the losses NRR nets away.
What goes in
- Starting customers only. Like NRR, GRR follows the customers you had on the first day of the period. Customers won during the period are excluded.
- Contraction: downgrades, fewer seats, lower tiers, discounts given at renewal.
- Churn: customers who canceled or didn't renew.
- Recurring revenue only. One-off services don't belong in ARR.
- A fixed period, usually a trailing 12 months, so the trend is comparable.
Reading GRR alongside NRR
| GRR | NRR | What it usually means |
|---|---|---|
| High | High | Customers stay and grow |
| Low | High | Expansion is covering a churn problem |
| High | Barely above GRR | Customers stay but don't grow |
| Low | Low | The base is shrinking |
GRR also matters for acquisition: a customer who leaves before your CAC payback period ends has cost you money. That's why retention and payback should be read together.
Common mistakes
- Letting expansion in. Netting an upsell at one account against a downgrade at another turns GRR into NRR. If your GRR is above 100%, the calculation is wrong.
- Including new customers. Only customers at the start of the period count.
- Treating a renewal discount as retained revenue. If the customer renews at a lower price, the difference is contraction.
- Reporting only NRR. A strong NRR with a weak GRR is a warning that depends on expansion continuing.
The free RevOps Foundations course covers net and gross revenue retention in Lesson 3, "The metrics that matter".