+110 NRR keeps walking into the room
Leaders keen on real growth keep talking about NRR
Several calls in the last two weeks have ended in the same place:
We want to hit 110% NRR. That’s the dream, that’s the goal. It’s not going to happen immediately, but that’s what we’re working towards.
The same number from different teams, but founders that are thinking the same way.
110% NRR has become the round target number for a particular class of founder and leader.
It’s exciting to be in the room for these conversations.
Why 110%? Why now?
No one’s getting strong-armed into this by a board or investors, not yet anyway.
The founders and the leaders that have said this to me are doing the math themselves. Money isn’t cheap anymore, so they’re looking to their own revenue for growth.
This 110% number came up in conversations with teams that are doing $1M ARR pushing to $10M. Those doing $10M ARR pushing to $50M or even $100M.
Both groups seem to have come to the conclusion that their existing customer base is the highest leverage path to their next milestone.
Robin Leathers ran the model on this: with the same $20M of S&M spend, a multiplication-first company — one that diverts a chunk of spend into retention and expansion — produces 83% more net-new ARR than an acquisition-first one. Same dollars in. $5M more ARR out the door. Same year.
The enterprise value math may be the bigger point. If you’re looking to sell or be acquired, revenue multiples go from 4.1x to 11.7x, depending on your NRR.
What founders think moves NRR
Here’s where I may get myself in a little bit of trouble.
NPS doesn’t move NRR. CSAT does not move NRR. CS headcount generally does not move it either. Relationships are important, but I’m not sure they matter as much or in the way many teams think they do.
What moves net revenue retention is product value delivered repeatedly to the right customer at the right moment in their life cycle.
Duh, right?
How this is measured is the tricky bit. Through no fault of their own, most customer success and post-sales teams are given qualitative tools and data. They’re given so much tooling and so much data, in fact, that the teams that I speak with often tell me that they feel overwhelmed by it all.
And so a lot of teams end up guessing, having more meetings, and reacting to the customers that make the most noise in the last QBR or through support channels.
What really moves it
Two things move your net revenue retention, and they’re connected:
Segmentation by goal, not just by size. Every customer comes to your product for a reason. What are they trying to accomplish, and how well are you solving for it?
Distance between signal and action. This is the most underrated and underappreciated. The longer the gap between the signal that says “this customer is disengaging” and when “we did something about it”, the less likely your action lands well. We’re all guilty of sitting on signals like usage drops, feature abandonment, and sentiment shifts for a little bit too long before doing anything about it.
Teams pushing NRR above 110% have shortened the loop:
Get the data.
Understand what it means.
Know what action to take.
Take the action.
Keep going.
The trick isn’t to get more data. It’s to make the data you already have so easy to act on that your team doesn’t have to interpret it. They spend more time moving and doing.
The head of RevOps at a $30 million ARR company recently told me his job is to help his team “spend less time thinking and more time doing.” He’s getting that done by providing his teams with signals and next best actions.
The stack that supports it
It’s not a sexy list:
A CRM that carries real context like call recordings, transcripts, deal history, and as many notes as the sales team can bear to put in.
Clean, usable, healthy data flowing through a CDP like Segment or RudderStack.
A signal system surfacing engagement changes in real time, not in monthly or weekly health score reviews.
A communication layer to reach your customers, which would include tools like loops, Intercom, HubSpot. Take your pick.
Slack for alerts because a human still has to act.
The tools are all out there, and it doesn’t take much effort (or budget) to make this work.
What to do next week
Build a list of your top 10 to 20 accounts. Do an 80/20 sort, picking the lens that matters most to your business, like revenue, strategic value, or referral influence.
For each account, see if they:
Expanded
Contracted
Churned
Now look at as much data as you can to learn what happened in the 30 to 60 days before the change. Are there any behaviors in your product data that you can tease out? Anything in your relationship or qualitative data that came ahead of the outcome?
Those are the signals to set up alerts for. That’s where a 110%+ NRR starts.
The math
Do you know your current NRR? If not, here’s the formula:
NRR = (Starting MRR + Expansion + Reactivation − Contraction − Churn) / Starting MRR
Run it for last quarter. Are you above 100, below 100, or not sure yet?
Reply or DM if I can help with it. Or if you’d like to brainstorm the tech stack and workflow side of things.
TTFN,
Peter