What does the calculation for Gross Revenue Retention involve?

Gross Revenue Retention (GRR) is an essential metric used to assess how much revenue is retained from existing customers over a given period, excluding any impacts from new customers. This metric specifically measures the revenue lost due to customer churn or contraction while disregarding new sales.

The calculation involves taking the total revenue at the end of the period (the numerator), which reflects what is actually earned after accounting for lost revenue from customer losses and reductions in spend. The denominator represents the total revenue generated at the beginning of the period, which establishes the baseline against which retention is measured.

By using both these values in the calculation, you can accurately determine the percentage of revenue retained from existing customers. This understanding is crucial for assessing the health and performance of customer relationships and the overall business. Since GRR focuses on existing revenue rather than new customer acquisitions, the mention of the percentage of new customers is irrelevant to the calculation.

Thus, combining the accurate understanding of both elements in the numerator and denominator encapsulates the essence of Gross Revenue Retention, confirming that both are fundamental to deriving the correct measure.