Evolving KPIs to Meet Strategic Objectives | Gillian Sheeran, CFO, Pricefx

CFO GUEST: Gillian Sheeran of Pricefx

Machine Generated Transcript (unedited)

CFOTL: You mentioned customer lifetime value, clearly, we talk about it a lot with finance leaders. Since your arrival, how is it calculated? Or has the formula they’ve traditionally used, do you see the world the same way? Is there some component that you think needs to be tweaked? Or is customer lifetime value always going to be evolving in some way?

Sheeran: There’s about five different angles to come at it. And so I’m trying to figure out which is the most relevant for users. I would put it this way, I went through, I met many different organizations at the start of this year, when I was looking for a role. And everybody has a slightly different nuance to those calculations. Essentially, enterprise value is lifetime value, profit growth, multiplier, et cetera. But some people will measure it on revenue, and some people will measure it on number of customers, particularly something like customer acquisition costs.

And everybody has a slightly different way of doing it. And I definitely found that through the sale process of rule, that every single organization came in to us and said, “This is the industry standard calculation of utilization.” And I would sit there and think, “But this is the 20th different industry standard I have seen in the last four weeks.” So I’m not sure there is an industry standard.
I think, as long as you try tie your KPIs with your corporate strategic objectives, and that includes looking at… Not just saying, “Okay, we want to exit.” But thinking, where is our growth coming from? What is our plan? So some organizations might be prioritizing profitability and working capital over growth, particularly right now. We’re not, we’re still a primary growth organization because our market’s buoyant. And, therefore, they might have a slightly more different nuanced view on things than we do. But just making sure that your KPIs are constantly evolving to your strategic objectives, and then you should be safe.