Why NRR Rises (or Falls) with Perceived Value
If you’re responsible for the core KPIs of any business function today, you’ve probably noticed a shift: growth is no longer just about chasing new logos. With budgets tightening and competition heating up, the real story is happening with the customers you already have. In fact, according to McKinsey Research, 80% of the value creation achieved by successful growth companies comes from the core business, generating new revenue from existing customers.1
That’s why Net Revenue Retention (NRR) has become the ultimate health check. NRR tells you how much revenue you’ve kept, and ideally grown, from your current base, even after factoring in churn. High NRR means customers are not only sticking around, but expanding. Low NRR means you’re working twice as hard just to fill the hole left by lost accounts.
So how do you improve NRR? It comes down to one simple but slippery idea: value.
When customers perceive real, ongoing value from your product, they renew, expand, and advocate for you. When they don’t, they churn. As Forrester notes on demonstrating value to your customers, “organizations must be laser-focused on ensuring that customers are successful from the start. If not, the organization risks future adoption, growth, and advocacy.”2
The question is, how do you consistently close the gap between the value customers expect and the value they actually experience? One approach is the Know/Show/Grow framework.
Step 1: Know What’s Valuable to Your Best Customers
Here’s the truth: you can’t create value until you know what customers actually care about. And it’s not enough to know their industry or job title. You need to understand:
- What outcomes they’re chasing. Are they trying to onboard their own customers faster? Grow into new markets? Expand their partner network? Launch a new product or business initiative?
- How mature their business is. Are they just getting started, or scaling globally? Are they well-established in a specific industry, or entering a new one? Entrenched in legacy IT systems or looking to make a fresh start?
- Which goals matter not only to the company, but to the professionals inside it. What would get your end-user or buyer the recognition or promotion they’re looking for?
The fastest way to build this understanding of value is by looking at your best customers. These are the ones who renew early, use your product deeply, and sing your praises at conferences. If you can unlock their insights, they can show you what success looks like.
Ask your customers:
- How does our product make you better at your job?
- What business outcomes have you achieved because of it?
- What features surprised you with unexpected value?
Then, because increasing NRR is a cross-functional activity, turn those insights into a living definition of your best customer. That definition should inform how Sales qualifies, how Marketing targets, how Product builds, how Support guides, and how Success onboards.
Step 2: Show How Your Product is Valuable
Once you know what’s driving value, the next step is showing it, not just to prospects, but to every existing customer who may be struggling with a value realization gap, and to the employees who need to tell the right story.
Here are five ways to make value visible, and turn perception into retention:
- Showcase examples: Nothing motivates like peer success. Share stories of customers who achieved impressive outcomes, especially ones in similar industries or roles. Divulge: “Here’s how a global HR team cut onboarding time in half” and suddenly, your other customers start to see that outcome as possible for them too.
- Leverage health checks: Annual or quarterly reviews are a perfect chance to connect the dots. Show customers how they’re using the product today, map that usage back to their goals, and spotlight both wins and missed opportunities. This isn’t about telling them they’re getting it wrong; it’s about saying, “Here’s where you’re getting the most value, and also here’s what you might be overlooking.”
- Build in a feedback loop: Case studies, customer roundtables, internal benchmarking… The list goes on. These are all ways of turning best-customer success into a rising tide that lifts all of those customer ships. Customers love to learn from each other, and those stories create a cycle of inspiration.
- Push smart adoption: It’s not “use more features.” It’s “use the right features.” Highlight the milestones that matter most for long-term stickiness: the first training program launched, the first advanced analytics report built. When customers hit those moments, they’re more likely to stick, and to grow, with your business.
- Scale what works, and abandon what doesn’t: With visibility into the activities that build best customers, you know what’s delivering ROI, and you know what isn’t. Show this to employees across the business. Replicate the interventions that improve customer health and boost lifetime value, and say adios to the actions that are dragging NRR down.
Step 3: Grow Revenue from Your Existing Customer Base
Here’s where it all comes together. By knowing your customers and showing them the value they’re already realizing, you set the stage for growth.
Growth doesn’t mean forcing upgrades. It means guiding customers to expand in ways that feel obvious and beneficial to them. That might be adding more licenses as their team grows, using advanced features that align with their changing priorities, or adopting new modules thanks to peer inspiration.
The best upsell and cross-sell motions don’t feel like sales pitches. They feel like guidance: “Here’s how teams like yours leveled up, and here’s the next step we recommend.”
And here’s the force multiplier of Know/Show/Grow: every time a customer expands, they also become a richer source of insight. Their story feeds back into the “Know” stage, sharpening your understanding of what value really looks like. That fuels more powerful “Show” motions, which in turn unlock more growth.
Over time, you create a self-sustaining NRR flywheel: more best customers → more success stories → more growth → more best customers.
Build the NRR Flywheel: Retention, Expansion, Advocacy
Improving NRR isn’t about a single team or a single tactic. It’s about building a cross-functional culture of value. Product designs for the best customer profile. Marketing tells value-driven stories. Sales qualifies and sets expectations. Success and Support guide customers to the milestones that matter. Together, they run the Know / Show / Grow playbook.
So the next time you’re reviewing NRR, don’t just ask “how much did we keep this quarter?” Ask:
- Do we know what our customers truly value?
- Do we show them that value clearly and consistently?
- Do we grow with them in ways that feel natural and impactful?
Answer yes to those, and NRR becomes more than a metric. It becomes your competitive advantage.
1. Harald Fanderl, McKinsey Research, On Experience-led Growth: Focusing on existing customers to unlock growth
2. Forrester, Launchpad to Customer Value, 2022
