What is gross revenue retention?
Revenue kept from existing customers before any expansion is counted. Abbreviation: GRR. New customers and upgrades sit outside this ratio.
Definition
Gross revenue retention, or GRR, is the share of repeating sales kept from the customers you already had, after they leave or shrink, and before any extra they buy. On the books, this is a metric, not a ledger account.
A yoga studio uses it to ask whether last quarter's members still produce as much repeating revenue. Extra class packs those same members bought are left out.
The Income Statement still shows all earned sales, including brand-new students and add-ons. GRR watches only the starting member book and stops before expansion.
This number cannot sit above 100 percent, because upgrades are ignored. It is not a count of new sign-ups.
Where it shows up
Balance Sheet: Related to the existing-customer book this metric tracks.
P&L: Related to repeating sales kept from the starting customer set, before expansion.
See also: Net Revenue Retention · Churn Rate · Monthly Recurring Revenue
When you look at your P&L, you will not see a line titled gross revenue retention. You will see membership income from every student, old and new, plus the extra packs.
When GRR is near 100 percent, almost all of the starting dues are still there before anyone talks about upgrades. When it is low, members left or dropped to a cheaper plan.
The Balance Sheet does not hold this metric. Prepaid unused class packs sit in deferred revenue until they are earned, and GRR is only the existing-member story.
On the Statement of Cash Flows, collecting a new student's annual membership is an operating inflow. That new student does not help this ratio, because they were not in the starting book.
Some teams put GRR on a Key Metrics Dashboard beside net revenue retention. That pairing is a management view, not an account in the books.
How it works
Freeze the repeating book from members who were active at the start of the period. That starting monthly recurring revenue is the denominator.
Follow only those members to the end of the period. Subtract dues from members who cancelled, and subtract dues cut when members dropped from unlimited to two classes a week.
Do not add the extra they bought. A member who adds a second style or a private lesson is expansion, and expansion stays out of GRR.
Divide the remaining amount from that same group by the starting amount. The result is GRR.
New members who joined after the start are excluded. Their sales are new-logo bookings, or new monthly recurring revenue, not this ratio.
Net revenue retention puts those upgrades back in after the losses. GRR stops at the losses, so it cannot climb above 100 percent the way that other ratio can.
A churn rate tells you what was lost. GRR is the share that remained from the starting book, still before expansion.
Stay with the starting member book when you read the ratio. The sales log explains who is new, and this metric explains how much of the old book is still there.
Keep a member-level file that supports the math. Anyone should be able to see starting dues, lost dues, and cut dues for the same people.
Do not mix annual and monthly figures in one ratio. Convert everyone to the same monthly recurring view before you divide.
Example
A yoga studio starts the quarter with 100 members paying $120 a month. Starting monthly recurring revenue from that group is $12,000.
During the quarter, 10 members cancel, which is $1,200 lost. Another 5 members drop from unlimited to a two-class plan that costs $60, which is $300 lost.
Eight members add a second style for $40 more, which is $320 of expansion. That $320 is left out of this metric.
The remaining book from the original 100 is $12,000 minus $1,200 minus $300, or $10,500. GRR is $10,500 divided by $12,000, or 87.5 percent.
If the studio also signed 20 brand-new members, those sign-ups raise monthly recurring revenue and bookings. They do not raise this 87.5 percent.
Common mix-ups
Gross revenue retention is not net revenue retention. Net revenue retention puts upgrades back in after churn and downgrades, and GRR leaves that expansion out.
Gross revenue retention is not new-logo bookings. Bookings from brand-new students sit outside this ratio, which only follows the starting member book.
Gross revenue retention is not a ledger account. You will not find it in the chart of accounts next to membership income.
Related terms
- Net Revenue Retention: Revenue kept from existing customers including upgrades, after churn and downgrades.
- Churn Rate: The share of customers or revenue lost over a period.
- Monthly Recurring Revenue: Normalized subscription revenue for a single month.
- Recurring Revenue: Revenue that repeats on a subscription or contract schedule.
- Annual Recurring Revenue: Monthly recurring revenue expressed on a yearly basis.
- Customer Lifetime Value: The total margin a customer is expected to produce before leaving.
- Revenue: The total value of goods and services the business earned in a period.
- Backlog: Signed work that has not yet been delivered or recognized as revenue.