Contraction is when an existing customer reduces their spend without leaving entirely - fewer seats, lower tier, removed add-ons. Distinct from churn (full cancellation). Both contraction and churn reduce GRR and NRR. Tracking contraction separately helps the CS team distinguish 'rightsizing' (often recoverable) from outright loss.
See how public B2B SaaS companies disclose this metric, with full historical time series.