My key KPI: Churn and net expansion rate
Welcome to ‘My key KPI’, a new weekly content series where we ask CFOs and FDs what metrics and measures they use to drive their businesses forward.
The aim is to understand how different finance professionals, across a broad array of industries and sectors, use data to inform their decision making.
This week, AccountingWEB speaks to Anup Singh, the CFO of Anaplan, a cloud software business.
We spoke to Anup Singh this week about metrics and KPIs, so it’s only natural that we asked him about his key KPI.
Singh has lived and worked in California’s Silicon Valley for over two decades. When he got there in 1996, Netscape had just IPO’d and the very idea of ‘the valley’ was starting to seep into the popular consciousness.
In July last year, Singh joined Anaplan, a UK startup that’s now based in San Francisco. It’s been quite a ride and late last year, the business became the UK’s latest ‘unicorn’ company with a valuation over $1bn.
Anaplan is cloud software enterprise, so Singh’s key KPIs focus on recurring revenue and subscribers. First and foremost, Singh focuses on churn rate. He looks at how many customers terminate their agreements - and also how many customers are decreasing the size of their agreements with Anaplan (what’s termed as ‘shrinkage’).
The churn rate is intricately tied to Anaplan’s net expansion rate. The big aim is to grow each customer’s spend and have it outpace lost revenue from churn and shrinkage. “It’s the so-called ‘land and expand’ strategy,” said Singh. “Land the initial deal, then service it.”