👋 Hi, it’s CJ Gustafson and welcome to Mostly Metrics, my weekly newsletter where I unpack how the world’s best CFOs and business experts use metrics to make better decisions.
How to Build a Net Dollar Retention Bridge
1. The Day I Learned the Hard Way
“Our NDR improved from 120% to 135% this quarter.”
I stood like a proud peacock in the boardroom, chest puffed, expecting applause for that 15-point bump in the good stuff.
“Where is it coming from?”
The question hit me like a dodgeball to the face. My confidence faltered.
“Um, well, our customers are buying more...” I stammered.
“Buying more licenses? Or buying more products?”
The distinction was lost on me then, but it’s not now. That was the day I realized the importance of deconstructing net dollar retention (NDR) into its core components—and visualizing the changes. Without this breakdown, you risk missing massive issues or riding trends you don’t actually control.
2. Why You Need an NDR Bridge
An NDR bridge isn’t just a pretty chart—it’s your way of answering questions like:
Are we expanding through licenses (headcount growth) or deeper product adoption?
Is one whale account hiding churn from a dozen smaller customers?
Could an astronomical NDR be masking missed upsell opportunities?
3. Build Your NDR Bridge
Here’s how to visualize the journey from starting ARR to ending ARR (with a template you can steal):
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