Gross retention
GROHS ree-TEN-shun
The percentage of revenue retained from existing customers before counting expansion. Measures pure customer stickiness.
Gross retention measures how much revenue you kept from existing customers, ignoring any expansion or upsells. Take the ARR from customers you had a year ago. Remove cancellations and downgrades. What percentage remains? That is gross retention.
Gross retention is capped at 100%. It cannot be higher because it excludes expansion. A company with 90% gross retention keeps 90 cents of every dollar its existing customers paid, before any upsells.
Gross retention is the truest measure of product-market fit and customer satisfaction. NDR can mask problems because aggressive upselling can compensate for high churn. Gross retention cannot hide. If customers are leaving or downgrading, it shows. Best-in-class SaaS companies maintain gross retention above 90%. Below 80% is a red flag that the product is not delivering enough value to justify its price.
Examples
A company with strong retention metrics.
Starting ARR from 2024 cohort: $20M. Cancellations: $1M. Downgrades: $600k. Gross retention: ($20M - $1M - $600k) / $20M = 92%. This is healthy.
A company masking churn with expansion.
NDR is 115%, which looks great. But gross retention is 72%. The company is losing nearly a third of its customer base annually and compensating by aggressively upselling the survivors. This is not sustainable.
Investors compare two acquisition targets.
Company A: 95% gross retention, 110% NDR. Company B: 78% gross retention, 118% NDR. Company A is stickier and more durable. Company B is growing faster from existing customers but churning at an alarming rate.
In practice
Read more on the blog
Frequently asked questions
What is a good gross retention rate?
Above 90% is strong. Above 95% is excellent. Below 80% is a serious problem. Enterprise products typically have higher gross retention than SMB products because enterprise customers are stickier and switching costs are higher.
Why is gross retention more important than NDR?
Gross retention shows pure product stickiness without the flattering effect of expansion revenue. A company can have 120% NDR and still be losing a third of its customers. Gross retention reveals that truth. Investors increasingly ask for both numbers.
Related terms
The percentage of revenue retained from existing customers after expansion, contraction, and churn. Above 100% means you grow without new sales.
The rate at which customers cancel or do not renew. Measured as logo churn (customers lost) or revenue churn (dollars lost).
The percentage of recurring revenue lost from cancellations and downgrades in a period. Measures the dollar impact of attrition.
Additional revenue from existing customers through upsells, cross-sells, and increased usage. The engine of net-negative churn.
The percentage of customers (logos) you lose in a period. Counts customers, not dollars.
Want the complete playbook?
Picks and Shovels is the definitive guide to developer marketing. Amazon #1 bestseller with practical strategies from 30 years of marketing to developers.