10 key performance indicators for a startup to measure growth

Hiren Panchal
by Hiren Panchal  |  19th Apr, 2022 in Business Insights

Growth isn’t easy regardless of the business you are running. With the added pressure of sustaining growth and retaining customers, startups have to be on their toes and measure their performance constantly. Therefore, it is essential to understand how well your business is doing and monitor key performance indicators (KPIs) to ensure you are on track.

A good startup marketing strategy will help you focus on the right KPIs and measure your progress. However, determining which key performance indicators (KPIs) to track can be tricky. In this post, we’ll outline ten important KPIs for startups and explain why they matter. So if you’re looking to measure your company’s progress, keep reading!

Top 10 KPIs for a startup to measure growth

1. Customer Churn
If your ultimate goal is to drive customers to your product or service, then you need to track customer churn. It is simply the percentage of customers who discontinue their use of your product or service over a given period of time. Tracking churn helps you understand how successful you are at acquiring and retaining customers.

If customer churn is high, it indicates that more people are leaving than joining, which is evidently bad news. It’s therefore important to focus on reducing churn through measures such as improved onboarding processes, better customer support, and targeted marketing campaigns.

2. Monthly Active Users (MAUs)
Monthly active users (MAUs) are another key metric that startups should track. This KPI gives you a sense of how engaged your users are and whether they are using your product or service on a regular basis.

MAUs can be tracked for different aspects of your business, such as total active users, active users by subscription plan, active users by geography, and more. Tracking MAUs can help you determine whether you are reaching your target audience and if your product or service resonates with them.

If MAUs are lower than expected, it’s time to analyse what’s causing people to stop using your product or service and take corrective action. For example, you might need to improve the user experience or offer more features.

3. Customer Lifetime Value (CLV)

Customer lifetime value (CLV) is another important metric that startups should track. CLV measures how much a customer is worth to your business over the lifetime of their relationship with you. This metric can help you determine how much you should invest in acquiring and retaining customers.

If your CLV is high, it means that each customer is worth a lot to your business, and you should focus on retaining them. Conversely, if CLV is low, it’s not cost-effective to retain customers, and you might want to consider focusing on acquisition instead.

CLV can be calculated in a number of ways, so it’s important to track this metric using the method that makes the most sense for your business.

4. Product/Market Fit

Finally, product/market fit is another key metric that startups should track. This metric measures how well your product aligns with the needs of your target market. A good product/market fit means that you are providing a solution to a problem that people care about.

If you’re not sure whether you have a good product/market fit, it’s worth doing some research to find out. Customer interviews, surveys, and focus groups can help determine whether there is a mismatch between your product and the needs of your target market.

5. Customer Acquisition Cost (CAC)
The cost of acquiring a customer (CAC) is another important metric that startups should track. This KPI measures how much you are spending to acquire new customers.

It’s important to keep CAC as low as possible since it can impact your bottom line. Strategies such as targeted marketing campaigns, strong customer support, and effective lead generation can help reduce CAC.

6. Customer Engagement Score

The customer engagement score is a metric that measures how engaged your customers are with your product or service. This score can be based on various factors, such as how often they use your product, how much they spend, and how satisfied they are with your product.

If customer engagement is low, you need to take steps to improve it. You might need to make changes to your product or service or update your marketing strategy.

7. Revenue Growth Rate
The revenue growth rate is the percentage increase in revenue over a given period of time. This metric is important for startups because it shows how well you are growing your business.
Tracking revenue growth rates can help you determine whether you are on track to achieve your goals. If revenue growth is slow, you might need to make changes to your business model or marketing strategy.

8. Gross Margin

Gross margin is the percentage of total revenue that is left after deducting the cost of goods sold. This metric is important for startups because it shows how profitable your business is.
If the gross margin is low, it means that you are not making a lot of money on each sale. You might need to find ways to reduce the cost of goods sold or increase prices.

9. Monthly Recurring Revenue (MRR)
Monthly recurring revenue (MRR) is a metric that measures how much revenue you are generating from monthly subscriptions. This metric can help determine the health of your business.
If MRR is growing, it means that you are signing up more subscribers each month. If MRR is declining, it means that you are losing subscribers.

10. Net Promoter Score (NPS)
The net promoter score (NPS) is a metric that measures how likely customers are to recommend your product or service to others. This score can be used to track the success of your customer satisfaction efforts.

If NPS is high, it means that you have a lot of happy customers who are willing to recommend your product or service to others. If NPS is low, it means that you need to work on improving customer satisfaction.

The Bottom Line

When it comes to measuring the success of your startup, it’s important to track a variety of key performance indicators (KPIs). Tracking these metrics can help you make decisions that will help your business grow. There are many tools and resources available to help you track your KPIs.

If you’re not sure whether you have a good product/market fit, it’s worth doing some research to find out. Customer interviews, surveys, and focus groups can be helpful in determining whether there is a mismatch between your product and the needs of your target market.

To know which startup marketing strategy ideas work for your business, connect with us at Litmus Branding, a brand strategy agency. We would be more than happy to help you out!

Hiren Panchal

Director, Litmus Branding Pvt. Ltd.
Ahmedabad, India
Hiren Panchal co-founded Litmus with Kapil. Hiren owns an exhaustive character and sharpens his views with an analytical mindfulness. He observes every creative with a conscious magnifier. Just as his doer attitude wins over his believer attitude, his thought leadership aims at creating leaders and not followers on his team. His creative insights have created brands worldwide and he has been commanding in the industry for +20 years. Come to the point, he’s already there.

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