Mostly Metrics is supported by BlueRocket, a top pricing consultancy for tech companies.
Source: Mostly Metrics + Virtua Research
Out of all the confusing metrics out there, you’d think “customer count” would be one of the simplest.
Think again…
Some considerations that can make customer count trickier:
Free trial periods
Active, but free, users
Prosumer customers (who act more like individuals, rather than companies)
Method of payment (personal credit card vs business credit card vs ACH)
Sales channel (self serve vs sales team)
In my opinion, companies are becoming more liberal in the way they define what a customer is. Part of the change is due to the rapid adoption of Product Led Growth strategies, which allow customers to self serve and sometimes buy before they try, as well as usage based pricing, which tends to start customers at a lower level than they would be on a typical seat based subscription plan.
And the elephant is the room is that many companies move the goal posts, to put it simply, it makes them look better. There are some perverse incentives to not report certain cohorts as customers. Things companies potentially improve by excluding certain groups of users:
Decreasing total churn
Increasing net dollar retention rate
Increasing average deal size
As a tip, whenever you analyze a company, you should start from the position of “anyone who paid you within the last 12 months is a customer” and then work backwards from there.
Source: Gitlab Investor Day Deck. Customers are greater than $5K in ARR.
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