Model the revenue impact of improving your user retention rates
pm5Category: product-marketingProject the revenue impact of improving your annual customer retention rate
Users Saved Annually
1K
Year 1 Revenue
$1,320,000
3-Year Revenue Gain
$769,200
Improving annual retention from 80% to 90% reduces churn by 10.0 percentage points, saving 1,000 users annually who would have churned. At $120 revenue per user, this generates $120,000 in year 1. The compounding effect grows your user base to 13,310 users by year 3, generating $769,200 in total revenue gain over 3 years.
Annual retention improvement creates compounding revenue gains by reducing churn and expanding the active user base. Each percentage point of retention improvement directly reduces the annual churn rate, preserving revenue from users who would otherwise leave while creating opportunities for upsells and referrals from the larger retained cohort.
Retention economics operate on compound effects where small improvements cascade over time. A 10% retention increase in a subscription business doesn't just save 10% of churned revenue—it preserves those users for future years, creating exponential value as the retained base continues generating recurring revenue and reduces customer acquisition costs needed to replace lost users.
Users Saved Annually
1K
Year 1 Revenue
$1,320,000
3-Year Revenue Gain
$769,200
Improving annual retention from 80% to 90% reduces churn by 10.0 percentage points, saving 1,000 users annually who would have churned. At $120 revenue per user, this generates $120,000 in year 1. The compounding effect grows your user base to 13,310 users by year 3, generating $769,200 in total revenue gain over 3 years.
Annual retention improvement creates compounding revenue gains by reducing churn and expanding the active user base. Each percentage point of retention improvement directly reduces the annual churn rate, preserving revenue from users who would otherwise leave while creating opportunities for upsells and referrals from the larger retained cohort.
Retention economics operate on compound effects where small improvements cascade over time. A 10% retention increase in a subscription business doesn't just save 10% of churned revenue—it preserves those users for future years, creating exponential value as the retained base continues generating recurring revenue and reduces customer acquisition costs needed to replace lost users.