How do you calculate the ROI of a churn prediction model?

On $8,000,000 of ARR with 12% annual churn, you lose $960,000 a year. If a renewal-risk model flags 50% of that churn 90 days ahead and your team saves 20% of the flagged accounts, you keep $96,000 a year and churn falls to 10.8%. ARR lost per year = ARR × annual gross churn. Flagged early = ARR lost × share of churn flagged 90 days ahead. ARR kept = flagged early × save rate. Churn after = churn × (1 − flagged share × save rate).

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What is an early churn warning worth?

On $8,000,000 of ARR with 12% annual churn, you lose $960,000 a year. If a renewal-risk model flags 50% of that churn 90 days ahead and your team saves 20% of the flagged accounts, you keep $96,000 a year and churn falls to 10.8%.

Those are the defaults. Move the sliders to your own numbers.

Annual recurring revenue $8,000,000Annual gross churn 12%Share of churn flagged 90 days ahead 50%Save rate on flagged accounts 20%

ARR lost to churn per year$960,000At today's churn rate

Of that, flagged early$480,000With time to do something about it

ARR kept per year$96,000Flagged ARR × save rate

Churn rate after10.8%Gross churn with the model in place

An estimate from your own inputs, not a quote or a guarantee. Your numbers stay in your browser until you send them.

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How the math works

ARR lost per year = ARR × annual gross churn.
Flagged early = ARR lost × share of churn flagged 90 days ahead.
ARR kept = flagged early × save rate.
Churn after = churn × (1 − flagged share × save rate).

What it leaves out

The cost of the saves themselves: discounts, extra service, account-manager time. It also assumes a flagged account is a savable one, which is not always true.

About the defaults

Be careful with the flag rate. In one back-test over 763 company-years, the signal most CRMs lean on, how recently the account was contacted, predicted nothing. Measure recall on your own history before trusting any number here.

What we would do about it