Test 01
The Inherited Churn Test
Is your churn lost, or was it sold?
What everyone does instead
Churn is measured on the installed base and owned by customer success. Retention initiatives are aimed at accounts already at risk. Nobody asks whether the account was a bad fit at the moment it was signed, because by then the origination decision is twelve months old and nobody is measuring it.
What to compute
- 24-month logo and revenue retention, cohorted by the sales manager who originated the deal, not by the CSM who inherited it.
- The same, cohorted by the forecast category history of the deal while it was open.
- Correlation between each manager's closure-versus-value judgment gap and the retention of what they originated.
The arithmetic
531 wins across four quarters, cohorted by originating manager MGR-003 105 wins 89% retained judgment gap 0.06 MGR-007 91 wins 87% retained judgment gap 0.05 MGR-009 86 wins 86% retained judgment gap 0.01 MGR-004 76 wins 79% retained judgment gap 0.12 MGR-001 73 wins 73% retained judgment gap 0.14 MGR-012 100 wins 71% retained judgment gap 0.13 Weighted average retention 81.15% Best manager 89.00% Spread, best to worst 18 points Gap to the best 7.85 points Correlation, judgment gap to retention -0.87 ARR originated in the period $45.2M 7.85 points of $45.2M $3.55M
Worked example
Six managers at a $180M ARR business, 531 wins across four quarters: an eighteen-point spread in 24-month retention attributable to who originated the business, and a −0.87 correlation between a manager's judgment gap and the retention of their deals.
Illustrative figures. The relationship shown is the hypothesis the test exists to check.
What changes if this is true
Churn sits on the customer success scorecard. If a measurable share of it was determined at signature, the scorecard is pointed at the wrong function, and the retention programmes aimed at accounts already at risk are working on the smaller half of the problem.
What you need and how long
Opportunity history with owner and manager at close
- Where it lives
- CRM
- Days
- 1
Contract start, renewal outcome, churn date
- Where it lives
- Billing or subscription system
- Days
- 1
Join, cohort and correlate
- Where it lives
- Analysis
- Days
- 2
Every test runs on the same two extracts, forecast history from the CRM and contract history from billing, pulled by a RevOps analyst in about an hour. Everything is measured against your own outcomes: no benchmark, no composite, no assumed uplift.