NRR/GRR targets: how to translate targets into expansion and churn goals

A practical guide to retention targets: how NRR maps to required expansion and how GRR maps to maximum churn+contraction (with monthly vs annual units).

Updated 2026-01-28

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Retention Targets Planner (NRR/GRR)

Example: 1.5% churn, 0.5% contraction, target 102% NRR and 98% GRR (monthly)

What targets should do

Retention targets are only useful if they turn into controllable levers. NRR targets imply an expansion requirement. GRR targets imply a maximum combined churn+contraction allowance.

Two identities (monthly)

NRR = 1 + expansion - contraction - churn.
GRR = 1 - contraction - churn.

Avoid unit mistakes

Do not plug annual NRR into a monthly model without conversion.
Monthly targets compound: small differences become huge over 12 months.
Set targets by segment (plan/channel) to avoid blended averages.

How to use targets operationally

Expansion: upsells, seat growth, add-ons, pricing migrations.
Contraction: prevent downgrades via value realization and success programs.
Churn: activation, onboarding, product quality, support, pricing fit.

FAQ

Should I prioritize GRR or NRR-

Both matter. GRR measures leakiness (product quality). NRR measures total existing-base growth including expansion. Strong NRR can hide weak GRR, so track both.

Do these formulas apply to all businesses-

They apply to recurring revenue cohorts. If you have one-time revenue, use different metrics or isolate the recurring base first.

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