From ARR to NRR

Adrian shared some great insights ! When we designed the shift program at my previous company, we started off with a few opportunities in High Touch, Growth and Nurture stages . This segmentation really helped us strike the right balance of customer contracts.

1. Show how retaining, expanding and churning impacted ARR vs NRR
2. How to setup and monitor indicators to business behavior
3. How would early, on time and later renewals affect ARR vs NRR . Also, how the "Add-On Early Renewal" can help NRR growth.
4. Data automation to handle #2 and for forecasts.
5. Incentives to forecast the numbers on regional or sub regional book of business.

Thanks a ton Adrian for sharing

I assume the driving motivation for this, @nipunmohanty, is encouraging CSMs to go beyond retaining revenue and expanding it. Of course, this effort will depend on the "white space" opportunities within your accounts.

We made the shift from ARR to NRR based metrics last year. It was definitely not an easy switch to make because of all the term confusion, here is the training I laid out to make it easy:

Step 1: Take the ARR from the previous year and calculate the NRR so the team can see the difference, this will bring up tons of questions from your team which should be a good way for you to see which parts are confusing your team.

Step 2: Take a couple of real scenarios that are likely to happen as examples on active renewals and explain how the NRR would be calculated.

Step 3: Give out additional scenarios and ask your team to calculate the NRR by them self in an active session ask them to explain how they did that calculation so again you can remove the point of confusion.

(Step 2&3 worked for me because my team was small at the time and we could get together for a couple in -person session)

Last Step: Explain to the team how they can correct the NRR if they see it going below target and setup monthly checks it really helps to get the team on track.

Would love to know an answer to this as well