Which segments expand most after the initial sale, and which contract?
№ 008 · NRR by segment
Definition
MetricNet revenue retention split by customer segment
Unit% of year-ago segment revenue
Three lines plot NRR separately for Enterprise, Mid, and SMB. Enterprise is usually highest, SMB usually below 100%. Compute each segment's NRR monthly as expansion minus churn minus contraction divided by opening MRR. Spread reveals where logo churn is eating you. Example: Enterprise 122%, Mid 108%, SMB 84%.
- NRR
- Net revenue retention. Cohort revenue this period divided by the same cohort revenue a year ago, including expansion, contraction and churn. New logos excluded.
- SMB
- Small and medium business. Segment label, usually under 200 employees or a defined contract-value band.
- MRR
- Monthly recurring revenue. Sum of every active subscription normalised to a monthly value, excluding one-off fees.
Benchmarks
| Bottom 30% | Median | Top 30% |
|---|---|---|
| Enterprise under 103%, mid-market under 97%, SMB under 90% | Enterprise ~118%, mid-market 102-108%, SMB ~97% | Enterprise 120%+, mid-market 111%+, SMB 105%+ |
Private B2B SaaS by ACV band as segment proxy (SMB under $25k, mid-market $25-100k, enterprise above $100k ACV), 2023-2025 survey data · Segment defined by ACV band, the split SaaS Capital argues is the best retention comparator: companies at similar price points organize, sell and support similarly. If your internal segments are by employee count, map them to ACV bands before comparing. Public-company enterprise leaders run higher still (McKinsey: 120%+ NRR cohort).
| Category | Bottom 30% | Median | Top 30% |
|---|---|---|---|
| SMB (ACV under $25k) | 90% or below | 97% | 105%+ |
| Mid-market (ACV $25-100k) | 97% or below | 102-108% | 111%+ |
| Enterprise (ACV above $100k) | 103% or below | ~118% | 120%+ |
When it looks bad
The segment bars invert the expected ladder: enterprise NRR sits at or below SMB, which means the product is not expanding where expansion should be structural (more seats, more modules, more usage).
SMB 98%, mid-market 101%, enterprise 99%. Enterprise accounts that should compound at 115%+ are flat: no multi-team adoption, no whitespace selling, contracts renewing as-is.
What to do about it
- If enterprise NRR is below ~110%, audit packaging before blaming CS: flat enterprise NRR usually means all value is sold on day one; introduce module or usage components so accounts have something to buy in year two (usage-based peers ran 125% vs 115% NRR in OpenView data).
- Build the expansion pipeline like a sales pipeline for the top segment: whitespace map per account, named plays, quarterly targets; expansion ARR costs ~$1.40 per dollar vs $2.00 for new logos (Benchmarkit 2025).
- For an SMB segment stuck under 97%, stop trying to expand and defend the floor instead: annual billing, dunning, and activation fixes; SMB expansion rarely outruns SMB churn at price points under $10k.
- Reprice grandfathered enterprise cohorts at renewal with 3-5% uplifts tied to added capabilities; price increases count in NRR and McKinsey attributes part of the 120%+ cohort's performance to pricing discipline.
Sources
- SaaS Capital ACV above $25k: median NRR at least 103%; top quartile above $100k ACV at 118-120%; benchmarking by ACV is the best starting point saas-capital.com ↗
- SaaS Capital ACV $25-50k: median 102%, quartiles 97-111%; higher net retention correlates with higher ACV saas-capital.com ↗
- Digital Applied (reporting SaaS Capital, Benchmarkit, ChartMogul data) Enterprise median ~118% NRR, mid-market ~108%, SMB ~97% digitalapplied.com ↗
- Benchmarkit NRR filterable by ACV and target customer segment; ACV is the attribute most correlated with retention performance benchmarkit.ai ↗
- McKinsey Top public performers post 120%+ NRR (examples at 128-139%), driven by customer success investment and pricing mckinsey.com ↗
- ICONIQ Growth NDR settling at ~110-120% across their growth-stage, enterprise-weighted universe iconiq.com ↗