Defining a Customer

• By
• Chris Burgner

  Chris Burgner

  12+ years of experience, most recently as a Director of Finance at Intercom.

  

Deciding where to draw the line on what constitutes a “customer” is one of the most critical decisions in reporting on ARR, as it has implications for cohorting and the component parts of ARR. It’s also relevant to how other teams, like Sales and Support, will organize their teams.

Can a customer have only one active subscription at any given time (1:1) or multiple concurrent subscriptions (1:many)?

Allowing multiple subscriptions to be mapped to a single customer is fine, especially if the buying consideration differs across product lines. Just ensure it’s clear in your logic that:

1. Gross New ARR is only counted on the first subscription start date
2. Churn is logged when the last active subscription is canceled

How do you handle cases where you work with multiple subsidiaries that roll up to a single entity (e.g., WhatsApp and Instagram to Meta)?

Any entity with purchasing authority (i.e., can sign a contract) should be considered a customer. We like this definition because it fits well with how you would organize your Sales or Support team, as each entity will likely have its own instance of your product.

You should consider including a “Global Parent” field in your CRM to link sibling accounts to the same parent.