Arrow
Back to Metrics Library

Gross Dollar Retention

Gross Dollar Retention (GDR) tracks the percentage of the original recurring revenue that a group of customers retains over time. GDR shows the net impact that contraction and churn have on a business. Especially when compared with logo retention, GDR demonstrates the revenue impact of churned customers. Some logo retention is inevitably and not fatal for a business; if small ACV customers (who are more likely to) churn but large customers retain well, companies can maintain high GDR.

Gross Dollar Retention = the lesser of current ARR and ARR in a specific past period from customers active in that period ÷ ARR from those customers in that past period

There are three methods of calculating GDR:

Trailing Period: Recurring revenue from all active customers at a certain point (eg October 2023) is compared to recurring revenue (excluding expansion) from those customers 1, 3, 6, or 12 months later. 

Cohorted: Customers are grouped by cohort (sign-up period). The cohort’s original revenue is compared to recurring revenue from that cohort a fixed amount of time (eg 12 months) later (excluding expansion).

Renewal: For customers who are up for renewal, the recurring revenue of their expiring contract is compared to the recurring revenue from their new contract (excluding expansion). 

All three methods give unique insights: trailing period helps show the most recent trend for the customer base as a whole, cohorted retention shows how a customer may behave at a certain age, and renewal retention is good guidance for customers who are coming up for renewal.

No matter how you measure, GDR is essential to understanding how much recurring revenue you have lost historically, and likely will in the future. NDR often gets more attention, but can be heavily weighted by large expansions, which is more common when the macro environment is good and customers are early in their lifecycle. Even if a company has high NDR, if GDR is low because many customers are churning or a smaller number of large ACV customers are churning, eventually the overall retention and growth of the business will degrade.

Benchmarks: 

Good: 85%

Great: 90%

Excellent: 95%

Settings: Segments, Date Range, Date Aggregation, Trailing Period, Revenue Type, Cohort Retention Baseline

‍

ProductPricingAboutBlogCareersMetrics Library
Copyright © SaaSGrid 2023. All rights reserved.
Terms of ServicesPrivacy Policy

Stage Conversion Rate

Stage Conversion Rate is the While Pipeline Value sums the total ARR of active opportunities in pipeline, weighted pipeline is weighted based on the current deal stage. Weighted pipeline value is a more accurate estimate of Closed Won ARR based on the current pipeline value.

How do I calculate pipeline?

Let's assume we have the following list of opportunities currently active in our sales process:

‍

Deal Name

Sales Owner

Stage

ARR

ACME Corp. - New Business
Bugs Bunny
Stage 1
$10,000
Bonner Books - Upsell
Bugs Bunny
Stage 2
$25,000
CHOAM - New Business
Daffy Duck
Stage 2
$15,000
Daedalus Research - Upsell
Daffy Duck
Stage 3
$30,000
Bugs Bunny
Electric Enterprise - New Business
Stage 3
$50,000
$20,000
Fabulous Factories - New Business
Daffy Duck
Closed Lost

‍

The total pipeline for these opportunities is $130,000. Additionally, we can also get pipeline totals for our two sales reps: Bugs Bunny ($85,000) and Daffy Duck ($45,000).

Note that Fabulous Factories - New Business is omitted from this sum, as the stage is marked as "Closed Lost".

We can summarize our pipeline by Stage to understand how much ARR is in each step of the sales process. To summarize the Pipeline ARR by Stage, we generate the following ARR table:

Stage 1 Pipeline

Stage 2 Pipeline

Stage 3 Pipeline

Total Pipeline

$10,000
$40,000
$80,000
$130,000

‍

While we have the total pipeline value here, we can apply the weightings to more accurately estimate how much of the pipeline ARR will be Closed Won.

What is probability to close?

Probability to Close is a percentage that estimates how much of the ARR that is in a particular stage of a pipeline is expected to be Closed Won. Typically, Probability to Close will be lower in earlier stages of the sales process and higher in later stages of the sales process.

If we multiply the probability to close by the Pipeline ARR, we'll get the Weighted Pipeline ARR value in each stage.

Stage 1

Stage 2

Stage 3

Pipeline ARR ($)

$10,000

$40,000
$80,000

Probability to Close (%)

25%
40%
65%
$2,500
$16,000
$52,000

Weighted Pipeline ARR ($)

Probability to Close assumptions for each stage assume that deals in different stages have a different chance of being won. Deals in Stage 1 are 25% likely to be won, while deals in Stage 2 are 40% likely to be won, and deals in Stage 3 are 65% likely to be won.

After applying the probability to close to the Pipeline ARR, we now have $2,500 in Stage 1, $16,000 in Stage 2, and $52,000 in stage 3, for a total weighted pipeline value of $70,500. This estimate is closer to the real value we expect to have in Closed Won ARR.