Natural Rate of Growth (NRG) is a growth metric coined by Open View Partners in 2020, that measures the rate of a company's growth that occurs organically based on the product's standalone ability to grow. It is calculated by multiplying annual ARR Growth Rate with the percentage of organic signups and the percentage of ARR that can be attributed purely to the product.
NRG is suggested as an alternative to traditional growth metrics because it acknowledges how growth occurs in companies adopting a product-led growth strategy. For early stage startups with an ARR less than $10M, typical growth metrics such as ARR Growth Rate can be misleadingly low. This is why NRG focuses on measuring revenue and growth through the lens of how customers are responding to the product.
To track this metric, multiply your annual ARR Growth Rate with the percentage of all signups that happened through an organic source, which means excluding any leads generated through paid marketing and advertising, events, or sales outreach. Multiply this number further by the percentage of incremental ARR obtained outside of sales or demos, and only through a user finding value in your product. The advantage of having a high NRG includes a loyal, high-intent user base, self-sufficiency, and exceptional product-market fit.
