What is Gross Revenue Retention?
With You Mon Tsang, CEO, ChurnZero
Today we’re joined by You Mon Tsang, a 4 time founder and CEO experienced with both enterprise and consumer applications. You Mon is currently founder and CEO at Churn Zero, a company dedicated to helping subscription businesses battle churn. It’s appropriate then that today’s metric is Gross Revenue Retention, a metric that gets to the heart of churn.
Gross Revenue Retention (GRR) calculates if you are retaining your current customers. It is very specific. It goes from 0%. You lose all your customers. And the highest could be is a hundred percent right. You basically keep all the customers and what they've been paying you at the beginning of the period.
So you generally do a period, oftentimes it's monthly and it calculates the total revenue at the end of the period. Minus revenue churn. So that could be, you know, contracts that expire, people who cancel, people who downgrade. Now you do not include any expansion. So all the total revenue at the end of the period divided by the revenue from that same cohort at the start of the period.
In the end, all companies should track this. It's pretty easy to track, you should track it on day one. But I think it's most important for companies that are currently in the growth stage and growth stage and have more than found product market fit.