good net retention rate

What is a good Net Retention Rate in SaaS?

The net revenue retention rate which you may also state as the net retention rate in SaaS businesses is an indicator that depicts the profits and the revenue earned by the business. Ultimately, the purpose of generating revenue is what gets you in the business loop. Let’s look at some of the best net retention rate and how they are doing good at it. 

Know more about NRR: What is net dollar retention?

Why is it important? 

You mostly need repeat purchases to get payments with a subscription model and it is easier to impress existing customers than starting all over to acquire new ones. With this model for some reason people churn out and that’s when businesses are more likely to see a net retention rate in SaaSthat is less than 100%.  But if you work out to retain existing ones and achieve a high net retention rate, this keeps away the need to acquire new customers. Because a net retention rate above 100% means you are excelling in receiving repeat purchases, upsells, cross-sells, and expansions. 

Which is the key customer retention metrics to track?- Gross Retention Rate or the Net Retention Rate?

Grow your multi million dollar portfolio with the best Customer Success Software!

Companies with Good Net Retention Rate

NRR below and equal to 100%NRR above 100%
Squarespace – 85%Snowflake – 169%
Hubspot – 100%Twilio – 155%
Surveymonkey – 100%Datadog – 146%
Slack – 143%
Zoom – 140%
Shopify – 110%
Zendesk – 112%
Okta – 123%
Qualtrics – 122%
Asana – 120%
Fastly – 130% 
Pagerduty – 122%

Snowflake – $850M in ARR with 169% Net Retention Rate 

Snowflake is a cloud platform that abolishes the need for an individual data warehouse system allowing secure sharing of the data which eliminates the setting up of huge hardware and software systems with the ETL solutions. 

What’s unique about their proposition is, “How much customers consume and they only pay for it”.

Best practices: 

  1. Consumption vs subscription 

Their target is to have an NRR of 162% regardless of how it is achieved and regardless of how you reach there by consumption or subscription. So, it is fine to have given it for consumption basis as long as it achieves the NRR of 162% is what investors and Wall Street say.

93% of its revenue comes from variable consumption users. It mostly neglects the unused capacity. In some arrears, it gets primarily billed with annual contracts. 

  1. Margin that is like software 

The 60% gross margins came after quite a time. Having a fixed cost is fine and waiting for the 60% gross margin is worth it until the IPO, but has to hit it once it makes for IPO. 

  1. No excuse for NRR dip

It is an observed pattern that most business has a dipping NRR when it reaches $1B. And it is seen in Snowflake as well, but it isn’t an excuse for dipping and it manages to rise high.

  1. They went slow for global attention.

Most firms start early in the footprints to go global but Snowflake took it slow to launch at the right time when it’s ready. 

  1. Whales are more in number.

100+ existing customers pay more than $1M + and the others are exploring and contributing to some revenue. Both the segments are quickly growing and the turning factor is the customer growth where the whales are at 110% and overall is 84% YOY.

Know more: How can VP of Customer Success get to 125% Annual Recurring Revenue (ARR)

Twilio – $2B in ARR with 155% Net Retention Rate

Twilio is a platform that creates easier communication by enabling messages, VoIP and phones to be embedded in mobile, web, and desktop applications,  giving businesses the ability to have better communication with the customers with their API integrations to make it a toolkit for every developer’s need. 

Best Practices:

  1. It has its NRR retained at $2B ARR 

As the firm scales at $1B, the NRR dips and need not be declining. Twilio consistently thrives to keep its NRR at 137% at all stages. Be it at IPO, $1B or $2B.

  1. Consistent in the ratio of large: small customers.

Unlike Salesforce, Twilio cares to keep the ratio of large and small customers ratio consistent to get $1B and more. Meaning to say as it grows they don’t necessarily leave the small customers behind.

  1. The gross margin stays in the 50s 

Although it is a company providing telecommunication services it takes real charges and has managed to keep its margins high as a software company of about 52% at $2B in ARR.

  1. An average customer is worth  $10,000 

An average customer pays $10,000. It shows that any acorn can turn out to be a larger account as it started from an acorn. 

Drive Customer Success throughout the Customer Journey!

Datadog – $1.2B in ARR  with 146% Net Retention Rate

For the cloud-scale applications, Datadog monitors the servers, tools, databases, and services, with a data analytics platform that is SaaS-based.

Best Practices:

  1. 1000 customers of all pay $100k +

80% of their revenue comes from customers paying $100k and more whereas the remaining is from small customers that are increasingly growing. 

  1. It’s about the expanding product profile.

Businesses after crossing $100M and reaching a $1B ARR are mostly multi-product companies. They have different verticals for growing revenue and they rely on it. 

  1. The revenue is from customers using 4 and more products.

It was back in 2018 for Datadog where customers only opted for 1 product. Now 28% of them contribute to paying for 4 and more products and covers a major of their revenue. Also, 75% of the customers contribute to their growing revenue by using 2 or more products. 

  1. They have many customers buying two or more products due to trust!

It isn’t that customers buy all the products at first but they do when Datadog earns their trust and eventually the customers expand by buying more products from them. 

  1. They have 130% NRR over 16 quarters and a GRR of 95%

It was possible within an initial land with free trials, which is easy to use and that delivers value in a short time. With the frictionless usage,  customers started opting for additional products, this couldn’t be any lesser in achieving a 130%  net retention rate in SaaS.

Bonus Tip: Think of your Customer Success function as a profit center 

Slack – $600 M in ARR with 143% Net Retention Rate 

Slack is a collaboration platform to drive the business forward by connecting all the team members at a place and has a unified system to get things done. 

Best Practices:

  1. Freemium is a direct conversion and lead generation strategy

Mostly we think freemium must not be the go-to option over the long run but for slack, it’s not the same. 80,000 slack users are paid and 500,000 users are using it for free. How is it helping them scale? The free version allows them to generate leads whereas it is those free members who used the product to convert as a paid customer.  

  1. Slack has attractive enterprises onboarded as well!

They have more customers who contribute to paying $100k and more a year. And it is this 40% of the revenue coming from big whales.

  1. Sales pitch exists even for freemium tools 

It is obvious that getting big deals takes time and so did it for slack. It involved a sales cycle that took months to generate revenue. So the sale is a process that is human-led and can’t be eliminated even in freemium tools.

  1. They have a net negative churn rate of 143%

Meaning they have a good customer retention rate who are paying for subscriptions, have upsells and expansions as well. 

  1. The burn rate is less 

With an ARR Of $600 M a year, it is only burning $97 M a year though it is not as sufficient compared to Zoom, it is burning less. All thanks to its virality. They have infinite runaway by still having $840 M in the bank. 

Zoom – $452 M in ARR with 140% Net Retention Rate

Allows businesses to focus on much greater things and engage with their customers with the reliable communication solution that is offered by the Zoom platform. 

Best Practises 

  1. The small is to medium is to large ratios are in 20:50:30

That has a significant amount of customers from enterprises where customers pay about $100k+ in a year which is a 30%v of the entire revenue. Whereas 22% of their revenue comes from very small customers who have less than 10 employees. 50% of the revenue is from slightly big customers who have different workflows. 

  1. It has 140% NRR 

This exhibits that small customer too can do big things and it’s not limited to enterprises.

  1. Let’s not force annual billing

Although you are upmarket, most of the customers are willing to make annual contracts and in Zoom 74% is billed annually and 26% are not up for annual billing and Zoom lets it be that way. 

  1. Freemium works for Zoom as well!

If you don’t believe it,  55% of the $100k + paying customers were initially on a free hosting version. As most of the time viral and freemium doesn’t help you scale, for Zoom that day hasn’t come yet!

  1. A low viral company can have capital efficiency as well. 

If any SaaS business has a viral coefficient though it is by small impact or higher impact, it substantially will increase the capital. And Zoom is an example of that. 

Bonus Read: 2022 will all be about these Customer Success KPIs 

Squarespace – $700 M in ARR with 85% Net Retention Rate

Squarespace is a SaaS firm that offers pre-built templates to build the website and host the website. 

Best Practices

  1. 85% NRR 

It targets SMBs and self-service businesses. With low CAC.

  1. Annual billing is 70% and monthly constitutes 30%

They don’t force you to take annual subscriptions by allowing the monthly subscription. 

  1. Seasonality to scale

In its first quarter, it always wins from the new marketing agenda, and in the third quarter, it gains from holiday rush agendas. 

  1. E-commerce components scale it over website revenue. 

It is this second product component of Ecommerce that gets it going with 78% of their revenue. Whereas the website revenue grew only 18%. It’s important to have a second product to scale. 

  1. Revenue from outside the US

30% of their revenue is coming from outside. 

Shopify – $4 B in ARR with 110% Net Retention Rate

An e-commerce company that helps retailers to sell their products in an online store with services that include customer engagement, payment, shipping, and marketing. 

Best Practices:

  1. The slowing down factor hasn’t come yet. 

This was all spiked up at the first quarter for Shopify in 2021 due to covid but some fine day it has to slow down and it hasn’t come yet. 

  1. 110% NRR from payment add ons. 

Just before that add-on, it was 100%  and now it’s more than 110%, indicating the SMBs are ready to pay for the value you create. 

  1. Fintech layer emerging from software. 

A fintech layer is adding value to their software ever since it is integrated. In the same fashion when seen with other platforms, the fintech layer has taken a breathtaking jump as well while SaaS is still adding to revenues. It’s the same pattern to be observed in Shopify.

  1. The partner program worked well. 

45,800 partners have referred Shopify to their customers which means it has extensive partner programs laid out. 

  1. Enterprise is stable whereas SMB’s are skyrocketing in Shopify. 

When you are scaling we see that enterprises grow but here the SMBs are growing faster. 

Hubspot – $1B in ARR with 100% Net Retention Rate

Hubspot is a software company offering solutions for customer service, sales, and marketing with tools such as live chat, social media marketing, CRM, web analytics, lead generation, and more.

Best Practices:

  1. 60% occupies a free trial region even at $1B in ARR. 

Even to date, 60% of their customers are still at the free version which hub spot started way later, and is challenging that it can scale with freemium as there will be conversions. 

  1. Growing internationally by 44%

Earlier as they started it was at 22% from international revenues but now at 44% and they started in the global market a bit earlier. 

  1. 100% net retention rate.

It targets SMEs and is growing 32% at $1B ARR. But it still has to work harder to be where slack is as they also target SMEs but with 140% NRR. 100% NRR is still impressive. 

  1. 40% of their revenue is from partners. 

They have a huge sales force but as a partner who doesn’t have a fixed payroll and is contributing to getting 40% revenue for Hubspot. It is uncommon to see in SaaS but it works.

SurveyMonkey – $300 M in ARR with 100% Net Retention Rate

Cloud-based software that offers online surveys to collect data, gives a backend data analysis tool and also has solutions for consumer marketing and brand management. 

Best Practices:

  1. An increase in pricing worked for them as it scaled.

Their increase in pricing has still got a 10% growth in revenue from all the paid users. 

So, the pricing increase strategy still works as they scale.

  1. Mostly some of them reach the upmarket.

18% of the revenue at this stage is from the enterprise. The question is how big the market can be with SMBs as targets and the freemium model as well, with lower price value? Not everybody can upmarket with the lower price but Surveymonkey has.

  1. When they go enterprise, they free up self and annual billing services.

Feel comfortable paying annually or monthly as you like, is the agenda. They have 78% annual billing coming up and self-service fills up the space by 22%.

  1. They have 100% NRR  

SMBs churn faster and they have 100% which is impressive but without 110% and more NRR, it is hard to grow quickly. 

Zendesk – $1B in ARR with 112% Net Retention Rate

Zendesk is a SaaS software that offers solutions for customer communications, sales, and support.

Best Practices:

  1. It is 112% NRR for Zendesk 

They are a mix of both SMBs and enterprises and it is making 110% NRR which is pretty impressive and is a must for such criteria. 

  1. Over time you don’t have to go more enterprise.

As you upmarket, it is still okay to grow with the growing enterprise and growing SMBs and not just limited to enterprise alone. Zensdesk is still growing with both.

  1. Their 50% revenue is from outside the US. 

Some enter the global market bit late and some from day one. But as you get an opportunity it is wise to embrace it.

  1. 50% of the growth is from existing customers.

It is winning the heart of the loyal customer, which is resulting in 110% NRR. 

Okta – $1B in ARR with 123% NRR

An identity management cloud solution that verifies the employee and manages their access to any application and is compatible with on-premise software as well. 

Best Practices:

  1. It is growing more at $1B ARR 

Even at $1B, it is growing by 43%. Which is more than firms like slack having an NRR of 140%. And it is this cloud that continues to scale.

  1. Growing NRR at 123%

Ever after IPO, it is the highest NRR it has ever reached and is continuing to grow. It need not be true that as you scale your NRR must dip. 

  1. Customer base growing on and on 

Even at $1B, the customer base is growing. and proves that you don’t necessarily need to rely primarily on the existing customer base.

  1. They are slower in going global.

It is still okay as the security element associated with them is local and they are going slow on it. 

  1. Customers paying $100k and more are growing.

The largest revenue contributors are growing fastly and surprisingly the small businesses are growing quickly as well. 

Qualtrics – $800 M in ARR with 122% Net Retention Rate

A cloud-based experience management software that improves and designs the services, products for other firms. 

Best Practices:

  1. They entertain annual contracts and have professional services laid out.

99% of their contracts are annual billing. The surprising fact is 25% of their revenue comes from professional services. It might seem like a lot but is a standard that an enterprise solution must meet.

They have high gross margins of about 35% and are not losing money in the service.

  1. They spend more on R&D 

When you have a product, growing it is a forever investment. Spending less shouldn’t be the goal. They spend 31% of their revenue on R&D. 

  1. Qualtrics has an NRR of 122% even at $1B ARR.

They are consistent in being at 122% even when they are at #1B in ARR. Again it is true that NRR need not dip at this stage and it is no excuse.

  1. Smaller customers are greater than larger ones. 

Usually, at this stage we see the larger customers growing but here 90% of their customer base is smaller ones and are keeping them at 120% NRR.

  1. Merger got them growing

Usually, the merger slows them down but Qualitrics after merging with SAP saw growing subscriptions of about 46%. So, a merger need not pull down. 

Asana – $400 M in ARR with 120% NRR

It is a platform for mobile and web work management that helps the teams to track and organize their work with 200+ integrations that helps them collaborate, communicate and coordinate to get things done.

Best Practices:

  1. At all categories their NRR is high.

It is 130% for customers paying $5k and more and 140 to 145% for customers paying $50k and more. Again it is an example that it need not drop down as it scales.

  1. 42% of customers are from outside the US

30 to 35% of scaling the SaaS company to the outsiders with a valuable product is worth it. 

Fastly – $144.6 M in ARR with 130% Net Retention Rate

A cloud platform that allows the developers with the tools to build a groundbreaking web or mobile application which is optimized for scaling, security, and speed. 

Best Practises:

  1. 84% of their revenue is from enterprise customers.

It is nearly going 100% enterprise and that is seen at this stage. So they leaving behind the smaller business. 

  1. The revenue is not recurring but as well otherwise. 

They charge based on requests and gigabytes for the minimum commits and as they exceed it brings the customer to fixed contracts. 

  1. Free and freemium still works at this stage.

They still practice the free trials to convert the people to the paid and it teaches even for $100k deals this works.

  1. Direct selling and marketing are the keys.

It is this strategy that gets them 8%% of the revenue to their stream.

  1. Went global at an earlier stage.

It gets its 40% revenue from outsiders and they started it early. You got to see when you are ready and embrace going global.

Pagerduty – $250 M ARR with 122% Net Retention Rate

A SaaS platform that helps the IT operations, C suite, business leaders, DevOps, and developers to resolve incidents related to business for giving out the best customer experience to the users.

Best Practices:

  1. Need a new product as you scale

Pageduty core product had a good response from growing 40% customers for using it for service and growing 50% customers for its security. But as you scale beyond $100m in ARR increasing the product portfolio is the key. 

  1. The metric to look at is, how much percentage of the customers has your customer’s been growing quarterly.

Their enterprise customers for 8 quarters have grown 33% and more. This metric can help you see the progress as you scale.

  1. For their product, a 95% renewal rate is seen.

They sell to SMBs and have a greater renewal rate compared to products sold to small businesses. So it’s their product value that gets the customers to take it.


For a SaaS business out there it is essential to work upon retaining customers to reach substantial growth and to make profits. If you have one it signifies that you are giving a higher value proposition to all your customers. 

It speaks much about the land and expands the concept along with the consideration of profits in mind. With an expensive customer acquisition cost, you want to end up nowhere. So, this strategy reduces the CAC,

Attaining NRR is also dependent on the best customer success practices and you want to include a customer success technology in your tech stack!

Amitha is a content writer at CustomerSuccesBox. She is a structural engineer by qualification but has a passion for writing..An avid learner in the morning and an explorer in the night. At present, she is exploring the Customer Success domain. Loves baking, dancing and drawing when she is not writing!