The core difference
NRR (Net Revenue Retention) answers: does an existing cohort grow after expansions, downgrades, and churn- GRR (Gross Revenue Retention) answers: how much of the cohort's starting revenue survives losses, excluding expansion.
Formulas (same inputs)
- NRR = (start + expansion - contraction - churn) / start
- GRR = (start - contraction - churn) / start
- Gap (NRR - GRR) is the share of starting revenue added by expansion.
How to interpret the gap
| Pattern | What it usually means | What to do next |
|---|---|---|
| High NRR, low GRR | Expansion is masking churn/downgrades. | Segment churn by plan/size, diagnose downgrade drivers, then protect expansion motions. |
| High NRR, high GRR | Durable retention with healthy expansion. | Scale acquisition with confidence; monitor segment pockets. |
| Low NRR, high GRR | Customers stick, but expansion is weak. | Improve packaging/upsell paths; add value moments that drive upgrades. |
| Low NRR, low GRR | Cohort is shrinking; losses dominate. | Fix onboarding/activation and churn drivers before scaling acquisition. |
Common mistakes
- Mixing cohorts or time windows (start from one cohort, movements from another).
- Using billings/cash instead of recurring run-rate movements.
- Using blended NRR/GRR that hides segment churn pockets.