Net Dollar Retention: A Key Metric for Business Growth

The concept of net dollar retention focuses on the revenue generated from an initial customer cohort over time. By tracking the changes in revenue from this cohort, including customer churn and upsells, businesses can calculate their net dollar retention rate. A net dollar retention rate above 100% indicates that the cohort is growing over time, while a rate below 100% signals shrinkage. High net dollar retention is crucial for achieving exponential growth in businesses, as it signifies the ability to add new customers while nurturing the growth of existing ones.