What is Net Dollar Retention?
With Laura Lenz, Partner @ OMERS Ventures
Laura Lenz, Partner at OMERS Ventures, joins Allan and Lauren to break down Net Dollar Retention (NDR): what it means, why it matters, and how it shapes the way investors evaluate companies.
What is Net Dollar Retention?
Net Dollar Retention NDR measures how much revenue a company retains from its existing customers over a given period, accounting for expansions, contractions, and churn. An NDR above 100% means existing customers are spending more over time, even without adding new ones.
It's one of the clearest signals of product-market fit and customer health — and investors pay close attention to it.
Is NDR only relevant for SaaS companies?
Laura addresses a common misconception: NDR isn't exclusive to SaaS. While the metric originated in subscription-based software businesses, any company with recurring or repeat revenue relationships can and should track it. If your recurring revenue business depends on customers coming back, NDR tells you how well you're holding onto them.
Is there a company size that's too small to track NDR?
According to Laura, there's no stage too early to start paying attention to NDR. Even pre-scale companies benefit from understanding whether their early customers are expanding or contracting. The earlier you build the discipline, the cleaner your data will be when investors start asking.
NDR and company valuation
NDR is a direct input into how investor valuation metrics assess a company's long-term value. High NDR signals efficient growth — you're not just acquiring customers, you're compounding revenue from the ones you already have. For Laura and the team at OMERS Ventures, it's a metric that surfaces the quality of customer retention metrics in a way that top-line revenue alone cannot.
Laura's advice for founders
"My advice is to know the number right before the investor that you're talking to. But also know it for your business because operating your business is way more important than raising the capital. My second piece of advice is that the pandemic has taught us a lot about reaping the rewards of good customer relationships."
Two clear takeaways: know your NDR before walking into any investor conversation, and track it because it makes your business better — not just because investors want to see it.
Metrics mentioned in this episode
If you want to go deeper on the metrics discussed, MetricHQ is a free resource with definitions, benchmarks, and context for hundreds of business metrics.