Description
Gross Revenue Retention (GRR) Rate or Gross Renewal Rate is the percentage of recurring revenue that a company is able to retain from its existing customers during a period. This includes downgrades and cancellations while it excludes expansion revenue.
Example
Suppose a company has 100 clients, each of which pays $2,000 a month. MRR at the start of the month will be $200,000. During the month, 1 customer downgraded by $1000 and another opts for cancellation. GRR will therefore be = ($200,000 - $1,000- $1,000) / $200,000 = $197,000 / $200,000 = 98.5%.
Why it matters
Any company that wants to be profitable must focus on retaining its customers. A high Gross Retention Rate means that the company is able to offer a strong product/service value to its customers.