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The Gross Revenue Retention governance card
Examine how starting cohort ARR decays through contraction and churn to reveal the unvarnished retention floor.
| Retention dimension | Operational scope | Formula impact | Governance failure if omitted |
|---|---|---|---|
| Starting baseline | Active cohort ARR on day zero | Denominator ($t_0$) | Mid-period new customers inflate the baseline |
| Churn leakage | Complete contract cancellations | Deducted in numerator | Departed customers treated as ongoing relationships |
| Contraction drag | Seat cuts, downgrades, usage drops | Deducted in numerator | Partial defection hidden inside aggregate revenue |
| Expansion exclusion | Upsells, add-on modules, price hikes | Strictly zero ($0.00$) | Upsells offset core product dissatisfaction |
| Theoretical maximum | Exactly 100% | Ceiling constraint | High NRR creates false confidence in product retention |
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Reference & Evidence
Source: Author's retention-governance framework grounded in cohort survival analysis and customer equity research from Lemmens and Gupta (2020), Reinartz and Kumar (2000), and Rust et al. (2004).