by Benchmarks, how to measure them from your ARR data, and why direction of travel is more important than a metric. How alignment amplifies, but only if the whole system is genuinely centred on customer value, rather than internal dashboards.
Frequent subscription questions and what they reveal
How do I grow my ARR? What if we are leaving money on the table? We have invested in [customer success, RevOps, new tooling, customer research, training, etc.], and yet we are still waiting for the payoff. How long will it take?
These are reasonable questions. Subscription leaders have probably been asked at least one of them in the last twelve months. But notice the pattern: How do I grow. What are we leaving behind. We have invested. How long will it take us.
The pattern is they are all pointed inwards at the organisation when the answer to every one of them is external. Here’s what I mean…
ARR grows sustainably when customers get results they can prove to their own organisation.
Money stays on the table when pricing doesn’t match how value lands in the customer’s world.
The investment in Customer Success, GTM, RevOps (pick your flavour of the month) pays off when those teams have a clear, evidence-based view of what customers value, not what a dashboard says they use.
Sorry to break it to you – you’re not the most important piece of the puzzle. The most important question in a subscription business is not centred on your teams, your tools or your processes. It’s about your customer. Do they know why they renew? Can they name the result to someone they’re getting sign off from? Is the product still doing the job they hired it for, or has it drifted while nobody was watching?
Where the payoff comes from
Revenue capture in a subscription business is one of five things happening in sequence. While people (investors, boards, SLT, etc.) often put it under the microscope first, revenue capture lands after understanding what is happening to your customer. Building a product that does the job they need done. Making the results visible in their organisation. Capturing that value through pricing and packaging that matches how it lands. And having the operating capability to execute all elements consistently.
Miss any one of those and the others don’t compensate – the system gets out of balance. Team alignment is part of the fifth element – it amplifies or dampens everything upstream. But it can’t fix a market position problem, a product problem, or a value capture problem on its own. A players learn not spot the solutions that aren’t likely to work out and avoid those brands. Think what that does to your talent capability.
My beef with the alignment evidence
In 2019, SiriusDecisions published the study that launched a thousand alignment programmes – businesses with tightly aligned sales, marketing and product functions grew revenue 19% faster and were 15% more profitable than less‑aligned peers. The numbers were credible but I don’t think they were complete. In most modern B2B subscription businesses, customer success now sits alongside those functions in the revenue engine, but the original analysis didn’t directly measure CS.
What followed was predictable. Businesses invested in alignment: RevOps functions, shared dashboards, cross-functional meetings, unified tooling. Forrester now reports that firms with high levels of alignment across their customer‑facing functions deliver 2.4 times higher revenue growth and 2 times higher growth in profitability than those without alignment.
Some industry surveys suggest that companies with mature RevOps functions report double‑digit percentage uplifts in revenue growth versus peers without a unified revenue operations capability.
But that’s not causation.
Working together works. But what if the gap in the research matters more than the headline?
The original study measured collaboration. Departments sharing notes, meeting regularly, passing leads cleanly. But if I understand the study, I don’t think it measure what those departments were aligned around – meaning this is where most alignment programmes stall.
You can have unified RevOps, a single dashboard, weekly stand-ups and perfect pipeline hygiene, and still watch the base erode quietly underneath it all, because the system is pointed inward.
While RevOps leaders cite incomplete, stale or inconsistently structured CRM data as one of their top operational barriers, the root cause IMO is the system they’re talking about doesn’t tell them what customers value, where that value is leaking, and what to fix first. They make it about them.
The performance grid: where are you?
ARR must be atomised to understand performance. GRR and NRR plot where a subscription business sits in its own operating reality. Rather than think of these measures as a target, I think of it as diagnostic to lead to prognosis.
| NRR < 100% | NRR > 100% | |
|---|---|---|
| GRR < 90% | Fundamentals Your base is eroding. Start with the customer’s world. Is the product solving a decision they have? Do you even agree who your customer is? | Pricing Lever Expansion is masking base erosion. Fix the base before expansion hides the damage, or create the glider for future GRR. |
| GRR > 90% | Money on the Table Base is loyal but you’re underpricing or you might be strategically penetrating the market. | Double Down Scale it. This is the spot – protect what’s working. Build the system that makes this repeatable revenues. |
Fundamentals (GRR < 90%, NRR < 100%): Both metrics are weak. Something is broken … in product fit, in how results land with customers, or in how the business is positioned. This is the most urgent diagnostic.
Pricing Lever (GRR < 90%, NRR > 100%): Expansion is hiding a deteriorating base. Price increases and upsells are propping up NRR while GRR falls. This is borrowed time. Fix the base before expansion masks the damage permanently.
Money on the Table (GRR > 90%, NRR < 100%): Base is sticky and loyal. Customers renew at high rates but you’re deliberately or accidentally leaving money on the table. Either pricing doesn’t match how value lands, or customers don’t see the expansion cases, or you’re not going after them.
Double Down (GRR > 90%, NRR > 100%): Both metrics are strong. The system is working. The move is scale and protection … keep what’s working, refine ruthlessly. This is where compounding happens.
How to calculate your GRR from ARR data
GRR measures how much recurring revenue you keep from existing customers over a period. It counts the impact on your revenue from churn and downgrades, but doesn’t give you the flattery from new business or expansion. You can argue over the measure but it’s a standard from The SaaS Metrics Standards Board who defines it as the cohort method: take a group of customers at the start of a period, measure their ARR, then measure the same group’s ARR at the end of the period (counting only what they were paying before, even if they’ve expanded). The ratio is your GRR.
The calculation, step by step
Step 1: Define your cohort. Pick a specific date, say, January 1 of the measurement year. Identify all customers who had a live annual subscription on that date. This is your opening cohort.
Step 2: Record opening ARR. For each customer in the cohort, record their annual recurring revenue (not bookings, not cash collected, but the ARR they had on January 1). Add them up. This is your Beginning ARR.
Step 3: Record ending ARR, adjusted. One year later (January 1 of the next year), for each customer still in the cohort, record their current ARR. But apply the adjustment: use the lesser of their beginning ARR or their current ARR. This captures downgrades and churn but excludes expansion.
If a customer churned (paid nothing), their adjusted ending ARR is zero. If they downgraded from $100k to $60k, their adjusted ending ARR is $60k. If they expanded from $100k to $150k, their adjusted ending ARR is $100k. If they renewed at $100k, their adjusted ending ARR is $100k.
Step 4: Calculate the ratio. Sum all adjusted ending ARR. Divide by Beginning ARR. That’s your GRR.
Worked example
| Customer | Beginning ARR | Ending ARR | Adjusted Ending ARR | Notes |
|---|---|---|---|---|
| Acme Corp | $120,000 | $0 | $0 | Churned |
| Baker Data | $240,000 | $240,000 | $240,000 | Renewed flat |
| Cortex Ltd | $85,000 | $127,500 | $85,000 | Expanded, but cap at beginning |
| Delphi Inc | $310,000 | $248,000 | $248,000 | Downgraded |
| Everett & Co | $175,000 | $175,000 | $175,000 | Renewed flat |
| Total | $930,000 | $790,500 | $748,000 |
GRR = $748,000 / $930,000 = 80.4%
This is weak because below 80% is problematic. You have a base protection problem.
What the calculation tells you
This is the read that matters: did your existing customers, in aggregate, renew at the same value? In this example, the answer is no. Customers who were worth $930k at the start are worth only $748k. That’s a $182k erosion you can’t build on. Expansion on top of this (if it happens) is noise at aggregate level.
The next question is why. Is Acme’s churn a segment issue (do all enterprise deals look like this?) or a customer success issue? Is Delphi’s downgrade isolated or systemic? Is Cortex expanding because they found more value, or because they got a price increase?
How to calculate your NRR from the same data
NRR includes expansion on top of GRR. Take the same cohort. Instead of capping customers at their beginning ARR, use their full ending ARR (including any upsells, cross-sells, usage growth, or price increases as long as it is genuine ARR). Divide by beginning ARR.
Using the worked example above:
NRR = ($0 + $240,000 + $127,500 + $248,000 + $175,000) / $930,000 = $790,500 / $930,000 = 85.0%
This business has 80.4% GRR and 85.0% NRR. The 4.6-point gap is expansion, not enough to offset the base erosion. So in this example it is weak on both metrics.
Compare this to a business with 88% GRR and 106% NRR. An 18-point expansion gap means customers are adopting more because they’re seeing value. That’s compounding health. However, there are further diagnostics to be surfaced about the gap between GRR and NRR (i.e. in this case it is 18% difference) as well as the direction of travel and further segmentation.
What the benchmark says
Substribe’s research across B2B information businesses put the median GRR at 88% and median NRR at 106%. These are market midpoints and they shouldn’t be your targets.
The lines that hold everywhere based on the Substribe network:
- GRR below 80% is a problem in every context. Something’s broken.
- GRR at 90% or above is a defended base. You have breathing room to invest in expansion.
- NRR below 100% means the base is shrinking in revenue terms. This is unsustainable long-term.
Everything else is conditional on what you’re doing and where you are.
Two things that change the read
Maturity of the base. Young businesses post flattering GRR because most revenue hasn’t yet faced a genuine renewal. Expect the headline to soften as more of the base gets tested. That softening is not failure. It’s untested becoming tested.
What happens at renewal. A first renewal can be sunk cost or an unexamined budget line. The second renewal is where the truth arrives, the budget’s been challenged, the original champion may have moved on, and the product’s had time to embed or drift.
You don’t have a proven renewal until it’s happened twice. You light a 2 year fuse every time there’s a change.
When something significant changes at the customer [a new leader, a strategy shift, a restructure, etc.] the fuse resets. A renewal that follows an unchallenged status quo proves history. A renewal that survives a real change event proves the product does a job the organisation needs done.
Direction of travel matters more than the number
GRR and NRR are annual metrics. They lag. Both are blended averages that hide the story underneath. You can work through a MRR, and review moments in time. But anyone reading that data who has sat in the hot seat knows there’s surprise lurking in the numbers.
Here’s a useful view to control the narrative. A business at 91% GRR moving to 88% over three years is in more trouble than a business at 86% moving to 89%. Direction tells you whether you’re compounding health or accumulating damage.
The businesses that hold and improve these metrics and focus on staying close to customers between renewals, get a handle on their repeat revenues. They decompose the headline: not settling for ‘our GRR is 88%’ but ‘GRR on the data feed is 94%, on the content subscription is 82%, and here’s why each one is different and what we’re doing about the gap’. I recommend they run a quarterly operating rhythm across product, pricing, marketing and customer-facing teams, turning evidence into action rather than a report while people wait out their bonuses for KPIs.
Your ARR and related metrics are annual. They lag, the blend obscures, so the discipline that compounds them isn’t about the metrics themselves. It’s about the operating rhythm that turns them into decisions.
What to do next: the diagnostic
You now have your GRR and NRR. You know where you sit on the grid.
If you’re in Fundamentals (weak GRR, weak NRR), something fundamental’s broken. Understanding why is urgent.
If you’re in Pricing Lever (falling GRR, strong NRR), the urgent move is to understand why the base is eroding before expansion masks the damage permanently and creating the glide for improved GRR and controlling NRR over time.
If you’re in Money on the Table (sticky base, weak expansion), the move is to capture that value – by understanding how and when. Your customers appear to be loyal, or your solution is sticky enough for now. But pricing doesn’t reflect what they get, or they don’t see the upsell, or you’re not positioned to sell it.
If you’re in Double Down (strong GRR, strong NRR), the move is systemising what’s working so you can scale it repeatably – disciplined quarterly operating cycles across the problem / product / GTM fit is critical.
The diagnostic that maps to each quadrant and tells you what to fix first, in order, is something Andy Burden and the network at Substribe created and parts of it are available at substribe.co/diagnostic
Sources
Metric definitions: SaaS Metrics Standards Board, Version 1.0 (January 2023). Standards for Gross Revenue Retention (GRR), Net Revenue Retention (NRR), and Logo Retention.
Benchmark data: Substribe benchmark research across B2B information brands.
Alignment and RevOps research:
SiriusDecisions (2019). SiriusDecisions Summit 2019 – Alignment, Relevance & Growth. Forrester/SiriusDecisions research on the economics of alignment across sales, marketing and product functions, cited in SiriusDecisions Summit keynote coverage.
Forrester (2023). Aligning Around The Customer Is Critical To Company Growth. Forrester Research, reporting that firms with high alignment across customer‑facing functions achieve 2.4x higher revenue growth and 2x higher profitability growth than low‑alignment peers
This guide is written from the Substribe Claude project, combining operator experience with research built through years of work with cross-functional leaders across B2B information, data and subscription brands.
Metric definitions follow the SaaS Metrics Standards Board Version 1.0.
Substribe helps B2B subscription businesses find where value is leaking and fix it in the right order. Start a conversation at substribe.co.
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