Table 3From “What is customer churn?”
Multi-Year Financial and Valuation Transformation
Table 3Multi-Year Financial and Valuation Transformation
| Operational Metric | Baseline Status | Post-Intervention Status | Net Absolute Variance | Relative Improvement |
|---|---|---|---|---|
| Involuntary Churn ARR | \$1,200,000 (4.0%) | \$360,000 (1.2%) | -\$840,000 | -70.0% |
| Remediable Voluntary Churn ARR | \$2,100,000 (7.0%) | \$900,000 (3.0%) | -\$1,200,000 | -57.1% |
| Terminal Unrecoverable Churn ARR | \$1,200,000 (4.0%) | \$1,200,000 (4.0%) | \$0 | 0.0% (Intentional pass) |
| Total Gross Revenue Churn ARR | \$4,500,000 | \$2,460,000 | -\$2,040,000 | -45.3% |
| Gross Revenue Churn Rate | 15.00% | 8.20% | -680 bps | -45.3% |
| Total Retention Cost | \$0 | \$300,000 | +\$300,000 | N/A |
| Net Preserved Gross Profit (Year 1) | \$0 | +\$1,332,000 | +\$1,332,000 | Highly accretive |
| Cumulative 3-Year Retained ARR | Baseline | +\$6,420,000 | +\$6,420,000 | N/A |
| Enterprise Valuation (7.0x ARR) | \$210,000,000 | \$254,940,000 | +\$44,940,000 | +21.4% Expansion |
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Source: Table from this essay. Sources and interpretation are given in the article.

From the essay
Growth that compounds
What is customer churn?
Customer churn measures account and revenue defection over a defined window. Separate logo churn from revenue churn and voluntary from involuntary loss.
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