Does 110% NRR mean the book is healthy?
Expansion can hide lost revenue in the opening cohort.
The question
LanternFlow starts the year with 100 customers and $1m ARR. Ten customers fully churn and five retained customers reduce scope. Ten new customers add $80,000 ARR, which is outside the opening cohort.
| ARR | |
|---|---|
| Opening cohort | $1,000,000 |
| Full churn | −$100,000 |
| Downsell | −$50,000 |
| Existing-customer expansion | +$200,000 |
| Price increases | +$50,000 |
| New customers | +$80,000 |
In this exercise, price increases count as expansion. Downsell customers remain in retained-logo count.
“Calculate NRR, GRR and logo retention. What would you investigate?”
Not saved by this site. Your browser may restore text when you navigate back.
A strong answer, step by step
Open each step in turn. This is one strong answer, not the only one.
Step 1: Keep one starting cohort
What would you do here? Open the move you’d make.
Add the $80,000 from new customers.
Tempting, but it misses something. That turns growth into a retention measure.
Reconcile only the opening cohort.
The strong move. New customers do not belong in this retention denominator.
See how a strong candidate says it
“Ending ARR for the opening cohort is $1m − $100k − $50k + $200k + $50k = $1.1m.”
Why it works: New customers do not belong in this retention denominator.
Step 2: Compare gross and net retention
What would you do here? Open the move you’d make.
Show the gross and net bridge.
The strong move. GRR exposes the lost existing revenue before expansion.
Report only 110%.
Tempting, but it misses something. Net growth hides $150,000 of lost existing revenue.
See how a strong candidate says it
“NRR is 110%. GRR is ($1m − $100k − $50k) / $1m = 85%.”
Why it works: GRR exposes the lost existing revenue before expansion.
Step 3: Count retained customers
What would you do here? Open the move you’d make.
Count downsells as fully lost logos.
Tempting, but it misses something. That mixes revenue loss with customer loss.
Count churned logos separately from downsell.
The strong move. A smaller contract is still a retained customer.
See how a strong candidate says it
“Ninety of 100 opening customers remain, so logo retention is 90%. The five downsells still count.”
Why it works: A smaller contract is still a retained customer.
Step 4: Diagnose the losses
What would you do here? Open the move you’d make.
Investigate what drove the loss and expansion separately.
The strong move. The aggregate result does not identify the cause or CS’s causal contribution.
Credit CS with all expansion and ignore churn.
Tempting, but it misses something. No evidence attributes all revenue changes to one team.
See how a strong candidate says it
“Segment churn and contraction by product, adoption barrier, size and stakeholder changes.”
Why it works: The aggregate result does not identify the cause or CS’s causal contribution.
The answer, in short
- Decision
- Report 110% NRR alongside 85% GRR and 90% logo retention.
- Because
- The book grew net, but lost $150,000 of opening revenue.
- What would change it
- If expansion is $50,000 rather than $200,000, NRR becomes 95%; GRR and logo retention do not change.
Expansion falls to $50,000. Which metrics move?
Common traps
- Putting new customers in NRR.
- Counting downsells as churned logos.
Check your answer
- I kept the opening cohort.
- I separated gross and net retention.
- I counted retained logos.
- I avoided unsupported attribution.
Last reviewed Nov 10, 2026