Gross Dollar Retention
Why it matters
Net revenue retention adds upgrades back in, so a few large expansions can cover a lot of leakage. In the same example, £15,000 of upgrades would lift net revenue retention to 105 per cent and the business would look healthy. GDR shows the underlying leak. It tells you how much of today's revenue survives before anyone is sold anything more.
How to apply it
- Pick one group of customers, usually those active twelve months ago, and compare their revenue now with then.
- Report it next to net revenue retention. The gap between the two shows how much expansion is covering for churn.
- Break it down by customer size, plan or acquisition channel. The leak is often in one place, such as small accounts on monthly plans.
- Set a floor and treat a quarter below it as a reason to fix onboarding or the product before spending more on acquisition.
- Review it quarterly alongside churn rate and revenue churn, since all three describe the same losses.
What it is
Gross dollar retention, or GDR, answers one question: of the recurring revenue these customers paid a year ago, how much is still arriving? It counts losses from cancellations and downgrades. It ignores upgrades and new customers, so it can never go above 100 per cent.
The formula is starting revenue, minus churned revenue, minus downgrades, divided by starting revenue. Say a group of customers paid £100,000 a year ago. Since then £6,000 cancelled and £4,000 was downgraded, so £90,000 remains. GDR is 90 per cent.
Common mistakes
- Including upgrades. If a figure goes above 100 per cent, it is net retention, not gross.
- Including new customers. Only the starting group counts. Anyone who joined later is out.
- Mixing periods. Compare the same twelve months for the same customers, not a blend.
- Using it for monthly plans without care. A 12-month figure on customers that rotate monthly hides how fast people leave. Use a cohort view.
- Ignoring downgrades. A customer who stays but pays less is still a loss, and it is the part most often missed.
- Reading one blended figure. A good average can hide one segment where retention is poor.
What is a good figure
Targets vary. Products sold to larger companies on annual contracts tend to keep a higher share than low-priced monthly plans. Compare against your own history and your own segments first, and treat outside benchmarks as a rough guide.
