Two metrics
NRR (net revenue retention) shows the book's revenue at the end of the period relative to the start, including expansion and net of churn and downgrades. GRR (gross revenue retention) is the same without expansion and can never exceed 100%. In this model NRR drives the payout and GRR is a floor, so expansion cannot hide lost customers.
Worked example
An account manager starts the year with DKK 5,000,000 in ARR. Customers churn for DKK 300,000, others downgrade for DKK 200,000, and expansion is DKK 700,000. GRR is (5,000,000 − 500,000) / 5,000,000 = 90%. NRR is (5,000,000 − 500,000 + 700,000) / 5,000,000 = 104%. The scale: below 85% GRR or 95% NRR nothing is paid, at 95% NRR half, at 100% the full target bonus, and above that 10 percentage points more per NRR point, up to 150%. With a target bonus of DKK 60,000, NRR of 104% pays 140% = DKK 84,000.
Combine with other models
Retention can be combined with residual commission or a target bonus on expansion. New customers belong in the AE's plan, where a clawback covers the first months. Read about churn rate in the glossary.
Pitfalls
Define in advance what counts as churn, downgrade and expansion, and on which date the book is locked. Price increases can lift NRR without new effort, so decide whether they count. If customers move between books during the year, write down how the starting value is adjusted.
Danish rules
A retention bonus is pay and must be stated in writing (Danish Employment Contracts Act, section 3, in Danish). If the employee leaves before the period ends, the bonus may be covered by section 17 a of the Danish Salaried Employees Act (in Danish) on a proportional share. Write down how a part-period settlement is made, for example with the bonus agreement template, and have your lawyer review it.
Why use GRR as a floor?
Because NRR can look healthy even when many customers leave, if a few large customers buy more. With GRR as a floor you only pay a bonus when the core book holds.
Is NRR measured monthly or yearly?
A year gives the most stable number, but it is far away. A compromise is to track NRR continuously and settle the bonus quarterly on a rolling twelve months.
In Prowi
Create the plan, pick the measurement point and period, set the rule, assign it to roles. From there every closed deal in your CRM is priced live, the rep sees it in the app, the manager approves, and finance exports the file. When data changes, the correction follows automatically.