← Every exhibit
Which common reporting practices undermine the operational validity of NRR?
| Practice | Why it misleads | Operational remedy |
|---|---|---|
| Reporting NRR without GRR | Severe churn is masked by heavy expansion in top accounts | Always report GRR and NRR as a paired disclosure |
| Conflating logo retention with revenue retention | 90% logo retention can coexist with 70% revenue retention if large accounts contract | Publish logo survival rates and revenue retention side by side |
| Treating unbilled usage as expansion | Volatile consumption spikes are booked as permanent annual run-rate | Count only recurring baseline commitments in ARR definitions |
| Omitting cost to serve in expansion accounts | High NRR can destroy margin if expanding accounts require massive custom engineering | Measure contribution margin retention beside top-line NRR |
| Shifting cohort definitions between periods | Inconsistent inclusion rules make historical comparisons meaningless | Lock cohort criteria in a formal data schema |
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Reference & Evidence
Source: Table from this essay. Sources and interpretation are given in the article.
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