Draft OKRs

MEMO To: Grace Mensah, CPO From: Staff PM Re: What Q3 OKRs tell us, and Q4 OKRs for Learner app, Admin and Growth

Bottom line

Q3 scored 0.81 and missed the company goal. NRR was 102% against a 103% baseline, and churn was 3.4% against 3.1%. Both got worse. Teams delivered what they planned, but the plan didn't move usage, and non-use is why customers leave. The Q4 OKRs below target usage and activation directly.

What Q3 actually tells us

1. The score measures delivery, not results. Ten of 16 KRs are outputs, and all ten scored 1.00. That count includes "Launch 3 HRIS integrations", which Admin labelled an outcome. The six true outcome KRs average 0.48. The 0.81 is mostly shipping.

2. What shipped didn't move the customer metrics. - Offline mode plus streaks and badges shipped, and weekly active learners per seat fell from 0.31 to 0.29. - Three integrations and a new dashboard shipped, and days to first learner moved only from 34 to 31. - Thirteen experiments and upgrade prompts shipped, and seats added fell from 9,200 to 8,100.

3. Customers told us why they left. Of 38 exits, 17 (45%) said their people didn't use it. Seven (18%) moved to their HRIS vendor's bundled LMS, nine cited budget and five cited content fit. Accounts reaching first learner within 14 days churned at a third of the rate of the rest. That could partly be selection, since healthier customers may simply move faster. It is still the strongest lead we have.

4. Two "wins" shouldn't be trusted. - Completion rate (41% to 58%) is not evidence. The definition loosened on 1 August from all modules to 80%, so the baseline and actual are measured differently. It needs restating on one definition before anyone cites it. - Uptime hit target, but no exit cited reliability. That is good hygiene, not a retention lever.

5. Process fix. Outputs should be initiatives, not KRs. Every team should carry at least one KR tied to a churn or NRR driver, and we should report outcome KRs separately from the average.

Q4 OKRs

Assumption (please confirm): the company goal carries forward unchanged: NRR 102% to 108% and quarterly logo churn 3.4% to 2.5%.

Learner app: Learners come back every week

Admin: Admins get learners learning in two weeks

Growth: Expand where seats are used

Growth's experiments should target accounts with healthy usage, since expansion into idle accounts is unlikely. Growth also depends on Learner's usage KR.

How it adds up

Churn: 3.4% to 2.5%. I split the 3.4 points by exit reason, assuming the 38 interviews are representative.

Halving non-use churn takes 0.75 points, shared between Learner (usage) and Admin (activation). The HRIS reduction takes 0.15. That gets to about 2.4, leaving 0.1 of buffer. I've put nothing against budget or content fit, since neither is addressable this quarter.

NRR: 102% to 108%. I'm assuming a 0.9-point quarterly churn improvement is worth about 3.6 NRR points annualised. Expansion has to supply the other 2.4. The 12,000 seats target (about 30% above Q2's 9,200) is a placeholder sized to that gap. I don't have the seat base or ARR to convert it exactly.

Risks and asks

• The churn target is a stretch. On annual contracts, Q4 churn comes from accounts renewing in Q4, so a 31-to-21-day onboarding improvement mostly pays off at later renewals. I want a list of accounts renewing before the end of Q1, with their usage. Learner and Admin should work that list first, so Q4 effort lands on accounts that can still change their decision. If we can't act on it, a realistic fallback is about 2.9% churn and 104-105% NRR. I'd rather agree that with the CEO now than explain it in January.
• Finance: please confirm how churn converts to NRR and what 12,000 seats is worth in NRR points.
• Data: restate completion rate on the 80% rule for Q2 and Q3.
• Exit data: 38 interviews is a small sample, and I assumed it covers all churn. Please confirm.
• Decision for you: confirm the Q4 company goal, and whether you'll back splitting the score into output and outcome in the next all-hands.

To: Grace Mensah, CPO From: Staff PM, Product Re: What Q3's OKRs tell us, and proposed Q4 OKRs for Learner app, Admin and Growth

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1. Bottom line

Q3 was not a great quarter. Both company key results moved backwards:

• Net revenue retention (NRR) fell from 103% to 102%, against a target of 108%.
• Logo churn rose from 3.1% to 3.4%, against a target of 2.5%.

The 0.81 average hid this because it mixed outputs, which we control, with outcomes, which customers control. We shipped everything we said we would. The customer behaviours those launches were meant to change didn't move, or got worse.

2. What Q3 actually tells us

Outputs scored perfectly. Outcomes didn't.

• All 10 output key results (KRs) scored 1.00. I'm counting "Launch 3 HRIS integrations" as an output; it was labelled an outcome, but it's a launch.
• The 6 genuine outcomes averaged 0.48.
• The three outcomes that link most directly to the company goal averaged 0.05: weekly active learners per seat (0.00), days to first learner (0.15) and seats added in existing accounts (0.00).

The 0.81 doesn't reproduce. The 16 KRs on the scorecard average 0.74. Averaging by team gives 0.75. We should find out how 0.81 was calculated before it's quoted again.

Launches didn't move the metrics they targeted.

One "win" is probably a definition change. Course completion rose from 41% to 58%. But on 1 August, "complete" changed from 100% of modules finished to 80%. Completion climbing while weekly activity fell suggests most of the gain came from the new definition. We should restate Q3 on both definitions before claiming it.

Scoring rewarded going backwards no more harshly than standing still. Weekly activity and seats added both ended below their baselines, yet each scored 0.00, the same as no change. The scorecard couldn't show that we lost ground.

The churn data points to adoption. Of 38 exit interviews:

Accounts that reached a first learner within 14 days churned at one third the rate of the rest. That is a correlation, not proof: healthier buyers may simply onboard faster. Still, it is our strongest signal. Adoption is the lever. More features and more experiments are not, on Q3's evidence.

3. Rule changes for Q4

1. KRs are outcomes only. Launches go in a separate initiatives list and are not scored.
2. Score against the baseline, and allow negative scores. Ending below the baseline should look worse than standing still.
3. Freeze metric definitions for the quarter. Any change gets restated on both the old and new definition.
4. Every KR names the company KR it serves.

4. Proposed Q4 OKRs

Baselines are Q3 actuals where we have them. Three baselines are marked TBC: we don't yet track those metrics, and Data will deliver them by the end of week 2. Each target is set as a fixed increase on its baseline, so the target is fixed as soon as the baseline is known.

Learner app. Objective: the seats customers pay for get used. This serves both churn and NRR.

The second KR matters because it targets the accounts whose renewal decision is being made now.

Admin. Objective: every new customer has learners in their first two weeks. This serves churn.

The HRIS sync KR turns the integrations we shipped into usage. It also addresses the 7 accounts that left for their HR system's bundled LMS.

Growth. Objective: expand where usage proves value, and stop seat losses at renewal. This serves NRR.

Growth should focus expansion on accounts above a usage threshold, to be agreed with Learner app. Q3 showed that prompting low-usage accounts to upgrade doesn't work.

5. How these add up to the company goal, and where they don't

Churn (3.4% → 2.5%). This works through two levers:

• Q4–Q1 renewal accounts. Contracts are annual, so churn this quarter is mostly decided by how accounts used us over the past year. The only lever with a near-term effect is raising usage in accounts renewing soon. That is the Learner app's second KR.
• New-account onboarding. Admin's onboarding KRs act on new accounts, which won't come up for renewal for a year.

To illustrate the size of the onboarding effect: suppose 20% of accounts currently reach a first learner within 14 days, and those accounts churn at one third the rate of the rest. Moving that share to 50% would cut churn from 3.4% to about 2.6%. That only holds once the whole customer base has passed through the new onboarding, and only if the relationship is causal.

Honest read: we will not reach 2.5% churn in Q4. Admin's onboarding work is what gets us there in 2025.

NRR (102% → 108%). NRR gains come from two places: fewer churned and contracted seats (Growth's seat retention KR, plus the Learner app's usage work) and more seats added (Growth's expansion KR).

I can't yet show the arithmetic that closes the 6-point gap. That needs Finance's figures for revenue up for renewal and average price per seat. Even with the 10,000 seats target, I expect Q4 to land nearer 104–105% than 108%.

The remaining 6 churned accounts don't map to these KRs, though the HRIS work partly addresses the bundled-LMS losses:

• Budget cuts (9 accounts) need commercial responses, such as flexible tiers.
• Content fit (5 accounts) belongs to the Content team. Their Q4 KR should be usage of newly published courses, not the number of courses published.

6. Decisions I need from you

1. Approve the four scoring rules, and correct the 0.81 figure with the CEO.
2. Discuss the company targets with the CEO. I suggest keeping 108% NRR and 2.5% churn as the year-end destination, with Q4 checkpoints of 104–105% NRR and 3.0% churn, so the scorecard tells the truth.
3. Ask Finance and Data to deliver the TBC baselines and the NRR arithmetic by the end of week 2. I'll lock the targets the same day.