Free Customer Success Tool - Customer Success Metric Metric: Gross Renewal Rate (GRR)

Gross Renewal Rate (GRR) measures the percentage of recurring revenue retained from existing customers during a specific period, excluding any upsells or expansions. It reflects how effectively a business retains its customer base and prevents churn. GRR is a foundational metric for subscription-based or recurring revenue businesses because it focuses solely on retaining existing revenue without factoring in growth from upgrades.

How GRR Is Calculated

The formula for GRR is:

GRR = (Renewed Revenue ÷ Renewable Revenue) × 100

Where:

  • Renewable Revenue: Total revenue eligible for renewal at the start of the period.
  • Renewed Revenue: The portion of that revenue successfully renewed.

What GRR Tells You

1. Retention Efficiency

  • GRR shows how well you are retaining revenue from your existing customer base.

2. Churn Impact

  • A low GRR indicates significant revenue loss due to customer churn.

3. Baseline Stability

  • GRR highlights the core stability of your revenue before any expansion or upselling.

GRR Benchmarks

GRR benchmarks vary by industry, but:

  • Above 90%: Generally indicates strong customer retention.
  • 70%–89%: Acceptable, but suggests room for improvement in reducing churn.
  • Below 70%: Signals high churn and potential risk to revenue stability.

How GRR Differs from Other Metrics

GRR vs. Net Renewal Rate (NRR)

  • GRR excludes upsells and expansions, focusing purely on retention.
  • NRR includes expansions and upgrades, providing a broader view of revenue retention and growth.

GRR vs. Customer Retention Rate (CRR)

  • GRR focuses on revenue retained, while CRR tracks the number of customers retained.

How to Improve GRR

1. Enhance Onboarding

  • A strong onboarding process ensures customers see value early, reducing churn risk.

2. Proactive Customer Support

  • Address issues before they escalate into cancellations by monitoring customer health.

3. Tailored Retention Strategies

  • Identify reasons for churn and implement targeted interventions (e.g., personalized incentives or product training).

4. Monitor Customer Engagement

  • Use engagement data to identify at-risk accounts and intervene proactively.

5. Simplify Renewal Processes

  • Make it easy for customers to renew through automated reminders or streamlined billing.

Why GRR Matters

1. Core Retention Insight

  • GRR isolates the effectiveness of your retention strategies without being influenced by expansion revenue.

2. Revenue Stability

  • High GRR provides confidence in the stability of your recurring revenue.

3. Churn Management

  • Tracking GRR over time helps you identify trends and take corrective action to reduce churn.

4. Investor Relevance

  • Investors use GRR to assess the health and reliability of your core revenue streams.

Tools for Tracking GRR

  • Subscription Management Platforms: Stripe, Chargebee, Zuora.
  • CRM Systems: Salesforce, HubSpot.
  • Analytics Tools: Tableau, Looker, or Power BI for segmentation and trend analysis.

About This Resource

  • Type: Metric
  • Category: Customer Success Metric
  • Sub-Category: Financial Metric
  • Effort:
  • Requires Budget: No