What Exactly Is NRR? Explained Simply

A plain-English guide to the SaaS metric that really matters

If you run a SaaS business, there’s one metric that tells you and your potential investors more about your long-term health than almost any other.

It’s Net Revenue Retention (NRR).

And yet, it’s one of the most misunderstood metrics in SaaS.

This post explains:

What NRR actually is
Why it matters so much
How to think about it in simple, human terms
What “good” NRR looks like
How Customer Success directly influences it

What is Net Revenue Retention (NRR)?

Net Revenue Retention (NRR) measures how much recurring revenue you keep from your existing customers over a given period of time - including expansion, and after accounting for churn and downgrades.

In simple terms:

NRR tells you whether your existing customers are worth more, less, or the same over time.

If your NRR is:

Above 100% → your existing customers are growing in value
At 100% → you’re holding steady
Below 100% → you’re losing revenue from your existing base

The simplest way to think about NRR

Imagine this.

You start the year with £100,000 in ARR from existing customers.

Over the year:

You lose £10,000 from customers who churn or downgrade
You gain £20,000 from upsells, expansions, or price increases

Your end-of-year revenue from the same customers is £110,000.

That means:

Your NRR is 110%.

You grew revenue without acquiring a single new customer.

That’s the power of NRR.

Why NRR matters so much in SaaS

NRR matters because it answers one critical question:

Are your customers getting enough value to stay and grow with you?

Strong NRR usually means:

Customers are successful
Your product delivers ongoing value
Growth is more predictable
Sales pressure is reduced
Investors pay attention

Many of the strongest SaaS businesses grow primarily through existing customers, not constant new customer acquisition.

What NRR is not

NRR is often confused with other SaaS metrics.

Let’s clear that up:

NRR is not logo retention
You can retain customers but still lose revenue through downgrades.
NRR is not new sales
Revenue from new customers is excluded from NRR.
NRR is not a “Customer Success-only” metric
It reflects how well the entire company supports customer value.

What is considered “good” NRR?

There’s no single perfect number, but broadly speaking:

Below 100% → Warning sign
100–105% → Stable, but limited growth
105–115% → Healthy SaaS business
120%+ → Best-in-class

What matters most is trend, not perfection. Improving NRR over time is far more important than chasing a number.

How Customer Success impacts NRR

Customer Success has a huge influence on NRR but it can’t do it alone.

NRR improves when:

Customers achieve clear outcomes
Value is reinforced regularly
Expansion opportunities are identified early
Renewals are proactive, not reactive

Strong NRR is usually the by-product of well-designed Customer Success, not aggressive upselling.

A final, simple truth about NRR

Here’s the simplest way to think about it:

NRR shows whether your customers are quietly building your business or quietly eroding it.

If you focus on customer outcomes, clarity of value, and long-term relationships, NRR takes care of itself.

And when NRR is strong, growth becomes a lot less stressful.

If you would like to learn more about how to improve your NRR in your business get in touch. I help SaaS businesses get clarity fast and put the right Customer Success foundations in place.

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