Newsletter · 15 min read

What is good retention?

Lenny Rachitsky · Lenny's Newsletter Free Intermediate

The benchmark study everyone quotes: good and great net revenue retention by business type, built from 20 growth experts plus real public company numbers. It stops the 'is 105 percent good' argument in one page.

  • Benchmarks differ by business type, so compare yourself only to your own category.
  • Enterprise SaaS net revenue retention: about 110 percent is good, about 130 percent is great.
  • Bottom-up SaaS: 100 percent revenue retention is good and 120 percent great, with Slack at 135 to 155 percent.
  • Warns startups rarely move retention much after launch, so weak early numbers are a hard signal.
Open on lennysnewsletter.com ↗

It answers 4 questions

  1. What is net revenue retention and why does every investor keep asking me for it?
  2. What does land and expand mean, and does it apply to my company?
  3. How much churn is normal, and is mine bad?
  4. What NRR should a genuinely best-in-class company target in my segment?

Read with it

  1. The cleanest definition of expansion MRR with the formula and the benchmark that matters: top companies get up to 40 percent of... Chargebee Article · 7 min read Expansion MRR: Definition, Formula, and Impact on SaaS Growth Chargebee
  2. The good, better, best NRR bands (100, 110, 120 plus) that boards actually benchmark against, sitting alongside the efficiency... Bessemer Venture Partners Report · report State of the Cloud 2023 Kent Bennett, Talia Goldberg, Mike Droesch and others
  3. The formula written out term by term, with the three performance bands. The right first read if you have been nodding along in... Stripe Article · 9 min read Net revenue retention (NRR): What is NRR and why does it matter for SaaS businesses? Stripe
  4. Involuntary churn is 20 to 40 percent of total churn for most subscription businesses and nobody owns it. This is the most... Chargebee Article · 15 min read 23 Ways to Reduce Involuntary Churn Zaid Assadi
  5. Gives per-industry churn thresholds so you can answer 'is my churn bad' with a number instead of a feeling. Software sits... Chargebee Article · 8 min read Churn Benchmarks: Enhancing Customer Retention Shaoli Paul
  6. Accel's argument that expansion revenue is the specific thing that carries a company past $50M ARR, with the Twilio and Shopify... SeedToScale by Accel Article · 9 min read How can SaaS startups tackle scaling beyond $50mn in ARR? Vyushita Sahay
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