# Net Retention {% embed url="" %} ### Net and Gross Retention Net and gross retention rates are two important metrics for measuring customer success. Net retention rate measures the percentage of revenue retained from existing customers over a specific time period, while gross retention rate measures the percentage of customers retained over the same period. #### Time Frame Both net and gross retention rates are time-bound metrics, meaning that they must be measured over a specific time period. The most common time periods used are monthly, quarterly, and annually. When reporting on net or gross retention rate, it is important to specify the time period being measured. #### Calculation **Gross retention rate** is calculated by dividing the number of customers at the end of a time period by the number of customers at the beginning of the period. For example, if a company has 100 customers at the beginning of a month and 90 customers at the end of the month, its gross retention rate for that month would be 90%. **Net retention rate** is calculated by multiplying the gross retention rate by the average revenue per customer (ARPC). {% hint style="success" %} {% code overflow="wrap" %} ``` For example, if a company has a gross retention rate of 90% and an ARPC of $100, its net retention rate would be 90% * $100 = $90. ``` {% endcode %} {% endhint %} #### Visualization The best way to visualize net and gross retention rates is with a waterfall chart. A waterfall chart shows the starting ARR, churn, contraction, expansion, and ending ARR. The Y-axis of a waterfall chart is typically dollars, while the X-axis shows the time period being measured. #### Interpretation Net and gross retention rates can be used to measure the health of a company's customer base. A high net retention rate indicates that a company is successfully retaining its customers and growing its revenue. A low net retention rate can indicate that a company is losing customers and/or not growing its revenue quickly enough. #### Conclusion Net and gross retention rates are important metrics for measuring customer success. By tracking these metrics, companies can identify trends in their customer base and make adjustments to their customer success strategies as needed. --- # Agent Instructions: Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter: ``` GET https://docs.leanscale.team/measuring-metrics/customer-success-metrics/net-retention.md?ask= ``` The question should be specific, self-contained, and written in natural language. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.