Every startup has a host of metrics they should track to keep their leadership informed and to ensure that wise decisions are made. But which metrics should you track, specifically? Let’s break down five of the most important startup metrics you should track as early as possible.
Do You Really Need to Track Metrics?
Absolutely. Your metrics provide you with valuable, unbiased data about the health and future of your startup. You should never rely on your instincts or personal predictions when making decisions about the future of your company or when deciding how to solve a difficult problem.
Metrics can tell you:
- how your marketing and SEO strategy should evolve
- how your startup is really doing “under the hood”
- what the long-term viability of your business is
- and more
Sites like Start From Zero can help you to understand more about these metrics and explain them in more detail if you don’t have any experience with them yet.
Average Revenue per User
First and foremost is your company’s average revenue per user or APRU. This metric will tell you the average amount of revenue you earn for every user or customer. Put another way, it shows how much your customers spend on average.
It’s a great metric for calculating your actual profits over the long-term as opposed to your launch day, when brand visibility may be at its highest. It can also help to inform you about which customers you should target with your marketing efforts going forward.
Customer Acquisition Cost
Next is customer acquisition cost or CAC. It’s a crucial metric since it tells you how much money you have to spend to earn a new customer, whether through email marketing campaigns, direct advertising, or other methods. This is a big concern for startups where every dollar counts.
Furthermore, it can tell you whether you actually make a profit when you sell something or provide a service. For example, if your CAC is higher than your customer revenue, you’ve experienced a net loss since it cost more to acquire that customer then they provided you with revenue.
Overhead Cost
Overhead cost is a key metric to track as your business grows and evolves. In a nutshell, your overhead costs are any expenses you must pay to keep your business running, regardless of whether they contribute directly to profits. These costs can include:
- administrative costs
- taxes
- employee wages
- rent
- business license costs
- and more
It’s important to track these as your business expands so you don’t accidentally overspend and end up making the cost of running your business too high for long-term viability.
Customer Lifetime Value
The customer lifetime value or CLV metric essentially tells you how much an average customer will be worth to your business for their “lifetime”. The lifetime in question isn’t their actual, biological lifetime but rather the span of time from when they make an initial purchase to their last purchase.
Naturally, this metric is an educated estimate and takes time to acquire since you need years of data from similar customers to make such a prediction. But it’s great to track as your business achieves stability and you look to expand, either further into your current market or into new markets.
Monthly Active Users
Lastly, be sure to track your business’s monthly active users, particularly if you run an online business (since acquiring this metric should be easy). Your business’s MAU will tell you how many people engage with your business every month. It can give you a good idea of how popular your business really is relative to revenue and whether it is sustainable without your few big spenders.
Tracking all of these metrics and more will help you maintain a solid business plan over the long-term and ensure you don’t run into any unexpected hurdles, even through turbulent economic times.