Customer Retention

How to increase net dollar retention

By
Joel Passen
November 1, 2022
5 min read

Churn. We've all heard about it before, especially if you're building a SaaS business. There's no shortage of thought leaders who proclaim the all too simplistic mantra: "Decrease churn! And increase profits!"

Yet, for many, churn as a metric is confusing and ambiguous. For example, customer churn is different than revenue churn for example and there many ways to calculate churn leading to confusion across your company.

If you're tired of the over-reliance on churn, you're not alone. Analysts and investors have been increasingly skeptical of churn rate calculations for years.

“There are too many darn ways to calculate churn. That makes it ambiguous.” says, Dave Kellogg

So if churn isn't the magic pill many businesses want it to be, what should you be looking at?

It all starts with, net dollar retention.

What is net dollar retention (NDR)? 

Net dollar retention (NDR) aka net revenue retention (NRR) has emerged as one of the top SaaS metrics that matter and for good reason.

NDR takes into account upgrades, downgrades, and churn to quantify how much recurring revenue from current customers you retained across a defined period of time. Why focus on a single metric such as churn, that doesn't actually give you the complete picture of the health of your business?

While no one metric is going to transform your business overnight, net dollar retention does help answer two incredibly important questions for businesses (especially SaaS businesses) looking to grow.

Net dollar retention can help answer:

  1. Is your product delivering the value promised during the sale? 
  2. Are your customers growing with you or without you? 

Having answers to these two questions can dramatically improve your business across the board.

What makes net retention so powerful is that for most companies, it’s cheaper to sell to existing customers than to sell to new customers. This makes net retention the most cost-efficient way to accelerate revenue growth. Instead of investing tens of thousands of dollars in a new marketing campaign, you can strategically use net dollar retention to improve the qualities and services of customers who have already trusted you enough to make a purchase. Yes, acquiring new customers is part of the business game, but all too often businesses neglect one of the most important revenue streams that already exist: current customers.

How to calculate net dollar retention

If your NDR is over 100%, this means that an increase in revenue is attributable to your existing customers.

Here’s how to calculate NDR. 

(Starting MRR + expansion — downgrades — churn) / Starting MRR  = NDR

Here’s an example.

Let’s say you start the month at $100,000 in recurring revenue (MRR). Over the month it added $25,00 in expansion revenue, has $10,000 in downgrades and another $5000 in churn.

($100,000 + $25,000 — $10,000 — $5000)/$100,000 = 110% NDR.

Your MRR is $110,000 with an NDR of 110% This is good. Essentially, your upgrades / upsells lifted your revenue despite losses. 

Without understanding your net dollar retention rate, you might be under the impression your business is sinking without a solution in sight. But with the knowledge that current customers are helping keep your business afloat, you can continue to invest in your marketing and business strategy without making rash business decisions.

What is a good net dollar retention (NDR) rate?

A minimum NDR rate of 100% is considered good for SaaS businesses selling to the SMB market. Selling to smaller accounts naturally yields a lower NDR. SMB clients are less financially stable, ripe for acquisition, and have smaller budgets. 

An excellent enterprise NDR rate is 130%. As with many SaaS metrics, there are other things to consider. For example, Workday’s NDR is 100% but gross retention is 95%. Either Workday is very good at selling the “whole” deal or their product footprint presents limitations. 

Here are some examples of net dollar retention rates for some interesting SaaS and SaaS-enabled companies.  

Why you need to care about net dollar retention.

NDR provides a revenue-based view of customer retention. NDR is increasingly important as you scale from a small to a medium-sized business and beyond. For example, a $5MM business that churns 20% can replace that $1MM with a net new business when it’s growing by +50% a year. But when a $30MM business needs to replace $6MM this becomes insurmountable especially if the growth rate is slowing. Understanding net dollar retention from the start will allow you to stay the course if your NDR rate is in line with or above average. Similarly, a low NDR score means you may have bigger challenges within your business you need to address before further investing in scale.

As with most things in business, the effects of NDR compound with time. It’s either additive or punitive with every customer that you acquire. This means that small upticks in NDR can add up to very large differences in total revenue over multiple years. For example, assume a business had $10MM in revenue last year and consistently generates 20% of revenue from new customers. Improving the  NDR from 95% to 105% may sound meager, but over five years the business will gain another $5MM in revenue. 

One of the biggest challenges within a business is knowing those small actions that have life-sized effects. Monitoring and tracking your NDR rate is invaluable in helping you build a sustainable business over the long term.

How to increase your Net Dollar Retention.

Net dollar retention is an important metric to track. So the question is... how can you start identifying those opportunities to grow and deliverable value at scale?

First, hire a great team of CSMs who know your customer's needs and pain points inside and out.

Second, develop more premium services to sell to your customer base.

While on paper, this sounds straightforward and doable. But frankly, this takes a lot of time, resources, and buy-in from management to create enduring impact. 

Now consider this.

What if you had a “tool” that could analyze customer emails, tickets, and conversations for important signals that are typically related to predicting churn?

Maybe something that could listen for suggestions about features and products that might accelerate value capture and lift revenue.

What if you could start such initiatives without major upfront investments in data infrastructure or change the way your teams work?

We may be biased, but here at Sturdy, we created that exact tool. Connect with a member of our team to learn how tracking NDR and other critical metrics can help take your business to the next level. 

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AI & ML

Your AI isn’t the problem. Your data is.

Joel Passen
May 6, 2026
5 min read

IT leaders may have resisted AI early, but that phase passed quickly. The real concern wasn’t whether to use it. It was how to control it. Governance, security, visibility. In the end, it came down to preventing sensitive work from being done in personal accounts. Reasonable.

So they got comfortable, signed off, and rolled it out. ChatGPT, Copilot, Claude, company-wide, with guardrails.

People are using it. That part worked.

The disappointment

The problem is what revenue leaders are finding now that it’s live.

The data they actually want to use isn’t accessible in any meaningful way. And that matters more than most people realize, because LLMs are only as useful as what you put in front of them. They’re exceptional at reasoning over structured, coherent information. They’re not designed to reconcile fragmented, inconsistent data spread across a dozen systems.

Nobody’s model is.

So instead, people compensate.

They cut and paste. Drop in exports. Upload a batch of emails and call transcripts, and hope coherence comes out the other side.

It doesn’t. They get fragments. Plausible-sounding ones, but fragments.

The diagnosis

What commercial leaders are running into isn’t a model problem. It’s a data problem.

The data they actually care about isn’t unified. It lives across email, Slack, Zoom, support tickets, calls, and CRM notes. Different systems. Different formats. No shared identity. No relationship context.

Even with connectors. Even with MCPs.

Because underneath it all, the data isn’t organized in a way a model can reason on. There’s no canonical view of the world.

The model doesn’t know that the same person shows up in Zoom, Slack, Zendesk, and Salesforce. It doesn’t understand that those interactions belong to the same thread, the same account, the same moment in a relationship.

So it fills in the gaps.

Not because it’s weak. Because it has to keep trying.

The gap

Meanwhile, the models themselves have gotten amazingly powerful. Reasoning is sharper than it’s ever been and getting better daily.

But the data layer most companies are feeding them? Still immature.

According to MIT’s 2025 State of AI in Business, over 80% of companies have explored or deployed LLMs, but only around 5% are seeing meaningful business impact.

High adoption. Low transformation.

That’s not a model problem.

What’s possible

What it looks like when this actually works is different.

Not dashboards. Not reports. Not exports.

A conversation. Like having the best revenue ops analyst you’ve ever worked with on call, one who has read every email, sat in on every call, and never forgets anything.

You ask: “Which accounts have shown signs of churn risk in the last 90 days?”

And instead of a guess, you get a ranked list. Accounts. ARR. The exact messages where the signal showed up. What changed. What triggered it. What to do next.

So you ask a follow-up: “Which of these are new customers?”

Now you’re looking at onboarding breakdowns. Common threads. Where the process is failing.

So you keep going: “Where are we missing expansion opportunities?”

And it surfaces accounts where someone said, “We’re thinking about rolling this out to another team.” But nothing was logged. No opportunity created. No follow-up.

That’s the shift.

You’re no longer stitching together context. You’re interrogating it.

What changes

What changes when you fix the data layer, when your commercial data is normalized, deduplicated, and accessible, isn’t just speed.

It’s the level of questions you can ask.

These aren’t dashboard queries. They’re judgment calls. The kind that used to require a senior operator spending a weekend in spreadsheets and Salesforce. When your data layer is clean and the model has real context to work with, they become a 90-second conversation.

That’s the difference. Not a better model. A better fuel.

The data infrastructure reality

Most teams won’t get there by accident. The infrastructure problem is real: identity resolution across systems, conversation reconstruction across channels, deduplication, and signal enrichment. It’s six to twelve months of plumbing if you build it yourself.

The companies that crack it first won’t just be more efficient. They’ll be operating with a fundamentally different information advantage. They’ll see churn coming, spot expansion signals, catch friction early, before any of it shows up in the numbers.

At that point, the question changes.

It’s not whether AI works.

It’s whether your data is ready for it.

And whether you’re going to build that layer, or keep working around the absence of it.

This is what we're building at Sturdy.ai. The data layer your LLM actually needs.

Insight Updates

The Moment B2B Sales Teams Forget Everything They Learned During the Deal

Joel Passen
May 6, 2026
5 min read

It’s not the close. It’s not the kickoff call. It’s the 48 hours in between — when the contract gets signed, the champagne (metaphorically) gets popped, and everything the sales team learned over months of conversations, negotiations, and relationship-building quietly disappears.

The delivery team inherits a contract and a few CRM notes. Not the story behind the deal.

This is the handoff problem. And it’s costing companies more than they realize.

Why the Knowledge Dies at the Signature Line

Think about what actually happens during a complex B2B sale.

Over weeks or months, a sales team accumulates an extraordinary amount of institutional knowledge. They learn why the buyer is actually moving now — not the official reason, but the real one. The compliance incident that became a board-level conversation. The internal champion who’s been pushing for change for two years and finally got budget. The exec who’s skeptical and needs to see a specific proof point before they’ll get on board.

They learn who matters and how decisions actually get made, which is almost never what the org chart suggests. They learn what got promised in the final stretch: the SLA clause that got added at the last minute, the integration that’s now contractually locked, the go-live date that the CFO has already presented to her board.

None of that lives in the CRM. It lives in emails, call recordings, Slack threads, and people’s heads.

And the moment the deal closes, the sales team moves on to the next one. That’s their job. That’s how they get paid. But the institutional knowledge they spent months building the context that would let an implementation team start informed, instead of starting over, largely evaporates.

Onto the next pipeline review.

The Cost Nobody Is Measuring

Companies measure churn. They measure NPS. They measure time-to-value.

Most don’t measure the cost of the knowledge gap at handoff — because it doesn’t show up as a line item. It shows up as implementation delays. Escalations. Customers who feel like they have to repeat themselves six months into a relationship that should already be mature.

It shows up as promises made during the sale that nobody on the delivery side knew about. Commitments that surface in month three as a nasty surprise. Expectations that were set in a negotiation conversation that never made it into a system anyone on the CS team can see.

The SaaS industry has spent a decade optimizing the top of the funnel. Sophisticated systems for capturing and qualifying demand. Playbooks for every stage of the sales motion. Entire conferences dedicated to pipeline hygiene.

And then we hand a contract and a prayer to the team responsible for actually delivering the value we sold.

What Good Looks Like

I’ll make this concrete.

We recently ran Sturdy against a real deal, a $190K ACV implementation that had just closed. Board-level compliance incident drove the urgency. CFO was the economic decision-maker: analytical, direct, not interested in being charmed. An integration was contractually locked in Exhibit A. Timeline slippage wasn’t just an ops problem; it would retrigger board scrutiny because of the prior incident.

The implementation team knew all of that before the first kickoff call.

Not because someone wrote a perfect handoff email at 11 pm the night before go-live. Because Sturdy read across the entire deal — emails, calls, negotiations — and surfaced the context that actually matters: why they bought, who really matters internally, what was promised, and where the risk lives.

That’s the brief I show in the video. Notice how specific it is. Notice that it doesn’t just describe what happened, it tells the delivery team what to do with it.

That’s what institutional knowledge looks like when it doesn’t get lost.

The Broader Shift

The handoff problem is really a symptom of something larger.

B2B revenue has always been a team sport — sales, CS, implementation, product, and finance all own a piece of the outcome. But the systems we’ve built treat each function as a silo. Data gets entered into the CRM by whoever remembered to do it. Calls get recorded and filed somewhere nobody looks. Emails pile up in inboxes that get searched only when something’s already on fire.

The signals are there. The context exists. It’s just buried, and it disappears at exactly the moments in the customer lifecycle when it’s most needed.

The companies that figure this out and build systems to capture, preserve, and operationalize institutional knowledge across the revenue lifecycle will have an operational advantage over those still relying on heroic individual effort and the hope that someone wrote a good handoff doc.

This isn’t an incremental improvement. It’s a different way of operating.

The moment a deal closes should be the moment an organization puts everything it learned to work.

Right now, for most companies, it’s the moment they forget it.

That’s the problem Sturdy was built to solve. If this resonates, start at sturdy.ai.

Insight Updates

Sturdy's MCP Server: One Call. Every Source. Already Resolved.

Joel Passen
May 4, 2026
5 min read

Another Step to Unlocking AI Outcomes: Resolve the Data First

The bottleneck is not your AI model. It’s the data it has access to. Sturdy’s MCP server delivers pre‑resolved, canonically organized context so your LLM can reason over it instead of guessing around it.

Another Step to Unlocking LLM Outputs: Resolve the Data First

For years, the problem was that data lived in silos. Different systems for sales, support, and calls. But the worst offenders were email and Slack. Email isn’t one silo; it’s as many silos as there are people on your team. Every rep, every CSM, every exec running their own inbox, none of it visible to anyone else. Slack is no different. Conversations buried in channels and DMs that nobody ever sees again.

What Changes

"Your LLM now has a single, usable data layer any user can query to inspect the full context of every prospect and customer."
“Every team now works from a single view of the relationship, not fragments of it. Sturdy gets everyone on the same page, no matter what screen they use.”

MCPs were a material step forward. They give LLMs a standardized way to reach outside their context window and pull live data from external systems without a human copying it in manually. An account record, an open ticket, a call summary, all accessible at query time without a custom integration.

Today, teams are dealing with a different version of the same problem. Every MCP server exposes a slice of the picture. The LLM can pull structured records, read a ticket, or fetch a call summary. What it cannot do is answer a question that requires all of them at once, because the data across those systems was never resolved against each other.

The entities don’t match. The timeline is fragmented. The thread that started the conversation often isn’t there at all.

The question every revenue team actually needs answered isn’t “what does this system say about the account?” It’s the question that requires the full picture: what has every person at our company said to every person at this company, across every channel, and what does that tell us about where this relationship actually stands right now.

No single MCP server can answer that. Most LLMs, handed raw data, will approximate an answer and present it with false confidence. That’s not intelligence. It’s a good guess.

That answer doesn’t live in any single system. It lives in the relationship between all of them. And if the LLM has to call multiple MCP servers to piece it together, resolve duplicate records, and reassemble a coherent account state on every query, the fragmentation problem hasn’t been solved. It’s just been moved into the inference layer.

What Sturdy’s MCP Does

Sturdy ingests from all of it. Email, call transcripts, support tickets, Slack, CRM, and meeting tools. Every channel where communication happens.

Before any of that reaches an LLM, Sturdy does the work that makes it usable. Entities are deduplicated and matched to canonical records. Interactions are classified. Signals are enriched, permission‑scoped, and source‑referenced. The relationship between interactions across systems is established once upstream.

Not inferred at query time. Resolved in advance, maintained continuously, and auditable.

That last part matters more than it sounds. LLMs are getting better at fuzzy matching, but revenue decisions cannot rely on it. “Probably the same account” is not good enough when you’re making retention calls, forecast commits, or expansion bets.

Then Sturdy exposes all of it through a single MCP server. One call. Pre‑resolved context with citations. The LLM starts from the signal, not the raw material.

The Token Cost Nobody is Talking About

There’s a practical consequence to raw MCP that most teams haven’t priced in yet. When an LLM has to reconstruct account context from scratch on every query, it burns tokens doing work that shouldn’t need to happen at query time.

Pulling from multiple sources. Resolving conflicts. Traversing relationships. Figuring out what it’s looking at.

At low volumes, this is invisible. At scale, it isn’t. The rediscovery tax on a raw MCP call runs roughly 60 to 80 percent of total token consumption per query. That’s the LLM figuring out context, not reasoning over it.

Sturdy removes most of that overhead. The context arrives already structured. The LLM starts from a position of knowing. The inference budget goes toward answering the question, not reconstructing the data.

What This Means for Teams Building on it

Sturdy’s MCP is designed for teams that have already provisioned an LLM and are now trying to make it useful. CTOs deploying models across their organization. Heads of Data and AI are trying to get real answers out of them. Operations teams are building agents that need reliable account intelligence.

The properties that matter:

Canonically resolved
Entity deduplication and matching happen upstream. The same account appears as one account regardless of how many systems it lives in.

Permission‑aware
Access controls are baked into the data layer. What a user can see reflects what they’re authorized to see in the source systems.

Source‑referenceable
Every signal comes with a citation. When something surfaces, the underlying interaction is linked.

Model‑agnostic
The data layer doesn’t change based on which model you use.

Nobody wants to spend 12 to 18 months normalizing data before they can build something useful. Resolving that data upstream changes what your LLM can do on day one.

Talk to us about connecting Sturdy to your existing AI deployment.

Your customers are already telling you what's going to happen.

Connect what customers say to the reasons your numbers move. Contextual revenue intelligence, ready for any LLM — or running natively in Ask Sturdy from day one.

Unlock Your Accounts
How to increase net dollar retention