How B2B Marketers Use Net Revenue Retention to Measure Growth

Lucas: There's a metric that SaaS investors obsess over but a lot of marketing teams still don't track closely — Net Revenue Retention, or NRR. Luna: I've seen it called the 'holy grail' of subscription metrics. But practically, what does it tell you that regular retention doesn't? Lucas: Right — gross retention tells you how many customers you keep. NRR tells you whether the ones you keep are spending more, less, or the same. If your NRR is above 100 percent, your existing customer base is growing without any new logos. Luna: So a net negative churn scenario. I've heard the benchmark is 120 percent for best-in-class SaaS. Is that actually achievable? Lucas: It is, but it requires deliberate work. I was looking at a mid-market SaaS company — call them CloudLogix — that went from 95 percent NRR to 130 percent over eighteen months. They didn't change their product. They changed how they measured customer health and when they asked for the upsell. Luna: What was the trigger? A specific event? Lucas: They noticed that customers who hit a certain usage threshold — say, 80 percent of their seat allocation — almost never churned, and they were prime for an expansion. So they built a health score that flagged accounts at that threshold and handed them to a customer success manager who offered a usage-based add-on. It was a very targeted, non-pushy motion. Luna: So it's less about marketing and more about the post-sale experience. But marketing can feed into that by creating content that helps customers realize they're under-utilizing the platform, right? Lucas: Exactly. That's the piece most teams miss. They treat NRR as a finance or CS metric, but marketing can drive the expansion by educating customers on use cases they haven't adopted. CloudLogix launched a 'power user' webinar series that showed advanced features. After that series, expansion revenue from attendees was 40 percent higher than from non-attendees. Luna: Let's talk about the calculation. If someone wants to compute NRR for their own company, what's the formula? Lucas: You take the recurring revenue from your existing customer base at the start of a period — say, beginning of the quarter. Then you add expansions from upsells and cross-sells, subtract contractions from downgrades, and subtract churn from customers who left. Divide that total by the starting revenue. That's your NRR. Luna: And the time period matters. A lot of public companies report it on a trailing twelve-month basis. But for marketing ops, I'd argue monthly is better to spot trends faster. Lucas: Agreed. Monthly NRR gives you a leading indicator. If you see a dip before quarter-end, you can intervene with a retention campaign or a customer health check. Waiting for the annual number is too late. Luna: One pushback I hear from B2B marketers is that NRR is only relevant for pure SaaS companies with monthly subscriptions. What about professional services or hardware? Lucas: It's harder, but not impossible. For a services firm, you can track NRR on retainer contracts — billable hours per client over time. For hardware as a service, think of companies like Caterpillar that lease equipment. They track 'fleet revenue retention' which is essentially NRR. The principle is the same: recurring revenue from existing relationships. Luna: So the metric is universal if you define your recurring revenue base properly. I want to get tactical — what's a simple first step for a marketing team that's never tracked NRR? Lucas: Pull your top ten accounts by revenue. Look at their monthly spend over the past twelve months. Calculate NRR for just those accounts. You might find that your top ten are actually declining — they're on old plans or they've reduced seats. That's a red flag that your expansion motion isn't working on your most valuable customers. Luna: And then you can build a program around re-engaging them. That's a concrete action. Lucas: Right. The other insight is segmentation by NRR. If you split your customer base into quartiles by NRR contribution, the top quartile often drives 80 percent of expansion revenue. Marketing can study what those accounts have in common — maybe they all attended a certain event, or they all use a specific feature — and then replicate that playbook for the bottom quartile. Luna: That's almost like an ABM approach but for retention. I like it. Lucas: It is ABM for existing customers. And it's where I think a lot of marketing teams underinvest. They spend heavily on top of funnel and let the post-sale journey be driven solely by customer success. But CS teams don't always have the bandwidth for tailored content or campaigns. Luna: So the marketing team can own the 'expansion content' — use case guides, ROI calculators, advanced training. That makes sense. Lucas: And it ties directly to NRR. If you produce a piece of content that leads to a 5 percent expansion in a segment, you can measure the impact on NRR and show real dollar value from marketing. Luna: Let me ask a tougher question. What if your NRR is below 100 percent? That means your existing customers are shrinking faster than they're expanding. What's the first thing to fix? Lucas: You have to diagnose whether the contraction is coming from downgrades or churn. If it's downgrades, you might have a pricing problem — customers are trading down to cheaper plans. If it's churn, it's a retention and product problem. In either case, marketing can help by creating a 'value realization' campaign that helps customers see the ROI they're getting. Sometimes a simple quarterly business review with a marketing-produced deck can reduce downgrades by 15 percent. Luna: And if the root cause is product gaps, marketing can't fix that alone. But they can surface the feedback. Lucas: Exactly. Marketing should be the voice of the customer internally. When you see NRR slipping, interview customers who downgraded. Find the common themes. Then present that to product and leadership. Luna: I'm thinking about how this applies to the current market in mid-2026. With budgets tightening in some sectors, I'd expect NRR to be under pressure. Are you seeing that? Lucas: Yes. In the last few quarters, a lot of enterprise software companies have seen NRR dip from 115 percent to 108 percent or so. The expansion isn't as easy when procurement is scrutinizing every add-on. That makes it even more important to have a systematic approach. Luna: And marketing can be proactive instead of reactive. I think this is one of those areas where if you wait for the quarterly numbers to tell you something's wrong, you've already lost six months. Lucas: Exactly. Marketing should have a dashboard that tracks NRR by segment monthly. When you see a segment dipping, you launch a campaign. That's the kind of agility that separates high-growth B2B teams from the rest. Luna: You know, these conversations we have on the show — where we dig into metrics like NRR and how to actually apply them — they're exactly the kind of practical insight that helps people do their jobs better. And I know for a fact that a lot of listeners have told us they've used ideas from this show in their own marketing operations. Lucas: That's great to hear. And if you're one of those listeners who finds value in what we do, and you'd like to help keep the show going ad-free, there's a simple way to support us. Luna: Yeah, it's buy me a coffee dot com slash fexingo. Just one word — fexingo. That's where listener contributions go directly to production costs, no middleman. We really appreciate it. Lucas: Back to NRR — one more practical takeaway. I think every marketing team should calculate NRR for their top 20 accounts before the end of the month. If you find three accounts that have contracted, you can build a targeted re-engagement sequence for each. That's a one-week project that can move the needle. Luna: And if you don't have the data in your CRM, that's the first problem to solve. Maybe the next episode is about data hygiene for NRR. Lucas: Not a bad idea. For now, I'd say start with the calculation. The insight you get from NRR is worth more than any vanity metric. Luna: Agreed. Thanks Lucas. Lucas: Thanks Luna.