Sales, Account Management, or CS: Who Should Own NRR?

Net Revenue Retention (NRR) is a defining metric for SaaS companies.

It’s a way to measure how much your existing customer base contributes to your growth through retention, upsells, and cross-sells.

It captures the heartbeat of your business, reflecting customer satisfaction, product value, and expansion success.

But when it comes to ownership, things can get murky.

Should NRR be owned by Sales, Account Management, or Customer Success?

Assigning responsibility is a challenge, but getting it right can unlock significant growth opportunities.

Let’s break down the roles, responsibilities, and strategies for deciding who should own NRR in your SaaS organization.

Key Article Takeaways

• NRR is a critical SaaS metric that measures both retention and growth within your existing customer base, making it essential for sustainable business success.

• Calculating NRR requires tracking Annual Recurring Revenue (ARR), including expansions, churn, and downgrades, to understand how your customer base contributes to overall growth.

• Ownership of NRR should be divided strategically across Customer Success, Account Management, and Sales, with each team focusing on their strengths.

• Factors like churn, expansion revenue, and segmentation heavily influence NRR and require clear accountability to improve outcomes.

• Improving NRR involves reducing churn, driving upsells, and refining pricing strategies, supported by robust customer success and collaborative processes.

• Managing NRR comes with challenges, including tracking complexities and resource limitations, but a clear ownership model and the right tools can help overcome them.

Breaking Down the Roles in SaaS Revenue Growth

In SaaS companies, especially early-stage, NRR can be influenced by multiple teams, each with distinct roles and responsibilities. Understanding these roles helps in assigning ownership that aligns with strengths and accountability.

Sales Reps

Sales teams are often the first point of contact for customers, working to close deals and bring in new business. Their main focus is on acquisition, but the groundwork they lay can significantly impact long-term customer retention and growth.

Account Managers

Account Managers typically focus on maintaining relationships, driving renewals, and identifying opportunities for upsells and cross-sells. Their role sits at the intersection of retention and growth, making them key players in driving expansion revenue.

Customer Success Managers (CSMs)

CSMs are dedicated to ensuring customers achieve their desired outcomes with your product. They focus on adoption, satisfaction, and churn prevention. While not always directly tied to revenue, their work is essential to maintaining a healthy recurring revenue base.

How to Calculate NRR

Before determining who should own NRR, it’s important to understand how it’s calculated. Net Revenue Retention (NRR) measures how much recurring revenue is retained and expanded within your existing customer base over a year. Using Annual Recurring Revenue (ARR) ensures a consistent and comprehensive view of long-term customer value.

The formula for NRR is:
(Starting ARR + Expansion Revenue - Churned Revenue - Downgrades) ÷ Starting ARR × 100

Here’s how the components fit together:

• Starting ARR: Your Annual Recurring Revenue at the beginning of the year.

• Expansion Revenue: Additional revenue from upsells, cross-sells, or increased usage within existing accounts.

• Churned Revenue: Revenue lost due to customer cancellations.

• Downgrades: Revenue reductions when customers switch to lower-priced plans or reduce usage.

Why Ownership of NRR is a Common Pain Point

Deciding who owns NRR can feel like navigating a maze. Misaligned goals and overlapping responsibilities between Sales, Account Management, and Customer Success often create confusion.

Without clarity, inefficiencies emerge, and key opportunities for retention or expansion may be missed.

• Conflicting Priorities: Sales teams focus on closing new deals, while CSMs prioritize retention. Account Managers often juggle both, leading to blurred lines of accountability.

• Diluted Responsibility: When multiple teams share ownership of NRR without clear boundaries, accountability becomes fragmented.

• Missed Opportunities: Expansion revenue from cross-sells and upsells can fall through the cracks when no team takes clear ownership of growth within existing accounts.

Aligning these teams with clear metrics and responsibilities is critical to overcoming these challenges.

Factors Impacting NRR

Understanding the factors that impact NRR is critical to determining who should manage it. NRR is shaped by both retention and expansion, making it a multifaceted metric.

Several elements contribute to its rise or fall, and each requires attention from different parts of the organization.

1. Customer Churn and Retention: High churn rates negatively impact NRR, highlighting the importance of a strong retention strategy. CSMs are often the frontline defense, focusing on customer satisfaction and engagement models to prevent churn.

2. Expansion Revenue: Revenue from upsells, cross-sells, and product upgrades directly influences NRR. This is where Account Managers and Sales teams typically step in to identify and act on growth opportunities.

3. Customer Lifetime Value (CLV): Retaining customers longer and increasing their spending boosts NRR. CLV is heavily influenced by pricing strategies, product value, and segmentation efforts, which require cross-departmental coordination.

4. Segmentation and Personalization: Value-based segmentation ensures targeted strategies, aligning customer needs with offerings. Both Customer Success and Marketing play a role in executing personalized engagement plans.

SaaS companies can better manage and improve NRR outcomes by addressing these factors with the right roles and strategies

Improving NRR

Improving NRR requires a combination of retention efforts, proactive expansion strategies, and consistent customer engagement. Assigning clear ownership over these activities ensures nothing slips through the cracks.

1. Reduce Churn: Customer churn is the biggest threat to NRR. Empower CSMs with health scoring tools to monitor satisfaction, predict risks, and intervene early.

2. Drive Expansion Opportunities: Upsells and cross-sells are critical for NRR growth. Equip Account Managers with data-driven playbooks to identify expansion-ready accounts and tailor proposals to customer needs.

3. Refine Pricing and Packaging: Ensure your pricing and packaging align with customer maturity and value. Offering tiered options or add-on features helps increase expansion revenue without overwhelming new customers.

4. Invest in Customer Success: A well-supported Customer Success team ensures customers see ongoing value, driving retention and opening doors for expansion. This team’s role is foundational to achieving strong NRR.

These strategies create a unified approach, allowing Sales, Account Management, and Customer Success to collectively contribute to NRR growth.

Challenges in Managing NRR

Managing NRR is not without its challenges. These hurdles can complicate accountability and tracking, making it all the more important to assign ownership strategically.

These challenges are amplified at early-stage companies when budgets are tight, and many folks are wearing different hats.

1. Tracking Complexity: Accurately tracking NRR requires clean data, consistent reporting, and robust technology. Misaligned systems or inconsistent definitions can lead to errors.

2. Role Clarity: With multiple teams contributing to NRR, overlapping responsibilities can create confusion. Clear boundaries and collaborative processes are essential to avoid inefficiencies.

3. Team Size and Resources: Early-stage SaaS companies often struggle with limited resources, making it challenging to allocate enough attention to retention and expansion simultaneously.

Overcoming these challenges requires alignment in processes and people around NRR ownership.

The Ideal Ownership Model for NRR

To succeed with NRR, ownership must reflect the strengths of each team while promoting collaboration. Here’s a framework for dividing responsibility effectively:

• Customer Success as the Retention Driver
  CSMs should own retention-focused metrics like customer satisfaction, health scores, and churn prevention. Their work ensures customers are achieving value, which is foundational for expansion efforts.

• Account Managers as Growth Leaders
  Account Managers can take charge of expansion revenue, focusing on upsells, cross-sells, and renewals. Their skills in building relationships and navigating contract negotiations make them ideal for driving account growth.

• Sales Teams as the Bridge to Long-Term Growth
  Sales should focus on converting new deals into long-term growth opportunities. Their role in setting expectations and ensuring a smooth handoff to Customer Success and Account Management is vital.

• Collaborative Processes
  While individual ownership is essential, cross-functional collaboration ensures alignment. Shared dashboards, regular strategy meetings, and a unified revenue operations (RevOps) framework can bridge the gaps.

How to Assign Accountability Without Silos

Assigning ownership doesn’t mean creating silos. It’s about defining clear roles while fostering collaboration.

• Assign Metrics to Teams:

  • Customer Success: Retention rates, customer health scores.

  • Account Management: Expansion revenue, upsell and cross-sell metrics.

  • Sales: New deal-to-growth conversion rates.

• Use Shared Dashboards: Transparency ensures all teams can track their contributions to NRR and collaborate effectively. Dashboards can display recurring revenue, expansion revenue, and churn data in real time.

• Hold Regular Alignment Meetings: Schedule cross-functional meetings to review progress, address challenges, and fine-tune strategies.

Key Strategies to Maximize NRR Ownership Effectiveness

With clear ownership in place, the next step is optimizing each team’s role. Here’s how to maximize effectiveness:

1. Empower Customer Success Teams: Equip CSMs with tools to track customer health, manage satisfaction, and predict churn risks. A robust health scoring program is critical.

2. Develop Playbooks for Growth: Standardized playbooks for upselling and renewals help Account Managers and CSMs drive consistent results.

3. Invest in Automation: Use automation tools to monitor recurring revenue, flag at-risk accounts, and identify expansion opportunities without relying solely on manual processes.

4. Adopt a Revenue Operations (RevOps) Model: RevOps can oversee the collaboration between teams, ensuring streamlined communication and consistent progress on NRR goals.

Conclusion

The question of who owns NRR doesn’t have a one-size-fits-all answer, but assigning clear ownership is essential for success. By leveraging the strengths of Sales, Account Management, and Customer Success while fostering collaboration, SaaS companies can unlock retention and growth opportunities.

Remember, NRR ownership isn’t just about titles—it’s about creating a strategy that ensures your customers grow with you.