The short answer: four metrics tell you most of what you need to know about customer health. Customer retention rate and customer churn rate count customers (logos). Gross revenue retention and net revenue retention count recurring revenue. Track one of each pair every month or quarter, and you'll know whether your business is set up for long-term growth.
Churn, retention and revenue are on the mind of every customer success and sales leader, because they show whether customers are getting value from what you sell. In subscription businesses, they also drive annual and monthly recurring revenue (ARR and MRR) and your growth forecast.
The four metrics at a glance
| Metric | What it measures | Formula |
|---|---|---|
| Customer churn rate | Share of customers lost in a period | Customers lost ÷ customers at start of period |
| Customer retention rate | Share of customers kept in a period | 1 − customer churn rate |
| Gross revenue retention (GRR) | Recurring revenue kept, before any growth | (Starting MRR − downgrades − churned MRR) ÷ starting MRR |
| Net revenue retention (NRR) | Recurring revenue kept, including expansion | (Starting MRR + expansion − downgrades − churned MRR) ÷ starting MRR |
Measure all four on customers who were with you at the start of the period. New customers won during the period are left out, so new sales can't hide churn.
Customer churn rate and customer retention rate
These two are opposite sides of the same coin, often called "logo churn" and "logo retention".
Example: you start the quarter with 200 customers and 10 cancel.
- Customer churn rate = 10 ÷ 200 = 5%
- Customer retention rate = 1 − 5% = 95%
Logo metrics treat every customer equally, which makes them a good measure of how well you serve your whole customer base, especially smaller accounts.
Gross revenue retention (GRR)
GRR shows how much recurring revenue you keep from existing customers, counting only losses: cancellations and downgrades. It can never be above 100%, which makes it an honest measure of how "leaky" your revenue is.
Example: existing customers start the month at $100,000 MRR. You lose $3,000 to downgrades and $5,000 to cancellations.
- GRR = ($100,000 − $3,000 − $5,000) ÷ $100,000 = 92%
Net revenue retention (NRR)
NRR adds back the growth you earn from existing customers through upsells and cross-sells. Above 100% means your existing customers are growing faster than you're losing revenue, so you'd grow even without a single new sale. This is sometimes called dollar retention.
Example: same as above, plus $12,000 in expansion from upsells.
- NRR = ($100,000 + $12,000 − $3,000 − $5,000) ÷ $100,000 = 104%
Why you need to look at them together
Each metric tells part of the story, and they can point in different directions:
- High NRR but low logo retention often means a few large accounts are growing while many smaller ones quietly leave.
- High logo retention but low GRR can mean customers stay but downgrade, a warning sign about value.
- Strong GRR but flat NRR suggests you're keeping customers but missing expansion opportunities.
Work with your leadership team and customer success managers to choose a small set of churn and retention metrics, define them consistently, and track them over time. Use them both to understand the past and to guide where your team spends its time.
How to reduce churn
- Find out why customers leave. Run exit interviews and tag churn reasons in your CRM.
- Watch leading indicators. Falling product usage, unresolved support tickets and low NPS usually come before churn.
- Fix onboarding. Customers who reach first value quickly are far more likely to stay.
- Build a health score. Combine usage, engagement and sentiment so your team can act before renewal is at risk.
- Close the feedback loop. Act on what customers tell you, and show them you did.
Frequently asked questions
What's the difference between gross and net revenue retention?
Gross revenue retention only counts revenue lost from existing customers through cancellations and downgrades, so it maxes out at 100%. Net revenue retention also adds expansion revenue from upsells and cross-sells, so it can be above 100%.
Should I measure churn monthly or annually?
Monthly works well for businesses with monthly contracts or many small customers. Quarterly or annual views suit businesses with annual contracts. Whichever you choose, stay consistent so you can compare periods.
Can HubSpot track churn and retention?
Yes. With the right setup of deals, lifecycle stages and custom reports, HubSpot can track logo and revenue retention. Our HubSpot implementation services include building these dashboards.
Want a clear view of your retention?
CXChronicles helps growth-stage teams define, track and improve churn and retention metrics, and build the processes that move them. Book a consultation.
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