When running a startup, it’s very important to track the metrics that are functioning and those that aren’t. This could be the toughest and less appealing part of operating a startup, but it’s certainly very important. If businesses don’t know where to concentrate their efforts, they won’t be successful in attracting potential clients.
Key metrics are the figures that allow us to understand the performance of the business and track if the company is heading in the right direction. But how does a company decide the best metrics?
Businesses should focus on taking their marketing strategies to the next level, pursuing funding, and putting the right practices in place rather than spending time with pointless emails or excel sheets. In this blog, we shall see how to grow a startup business with the help of key metrics.
Table of contents
- What are the characteristics of a great business metric?
- 7 Important business metrics to grow your startup
- Final thoughts
What are the characteristics of a great business metric?
Easy to measure: A complex measuring process should be avoided. A metric that is simple to set up and measure makes the entire procedure easier.
Aligned to company objectives: When a metric is aligned to the objective of a team, industry, firm or organisation, it makes achieving the goals easier.
Future Prediction: Agood metric should also assist you in predicting future effectiveness.
Comparable with other performance measures: The metric should evaluate how well your company performs compared to its rivals.
7 Important business metrics to grow your startup
- Conversion rate
The conversation rate indicators for companies that operate online would be the rate at which your website’s visitors become customers.
Several factors play an important role in conversion rate, such as new visitor time spent, interactions per visit, old visitor conversion rate, the value per visit and more.
Apart from that, information about landing page conversion rates, lead-to-customer conversion rate and more can assist a startup in understanding what is converting and how.
The best method for tracking this metric is through your Google Analytics account.
Monthly recurring revenue, or MRR, is an important matrix to track for most SaaS businesses.
As the name suggests, you focus not on profitability but on the revenue your business generates consistently monthly. Investors favor companies with a smooth growth of MRR.
- Website Traffic
A leading indicator to growing your startup’s reputation and success is the monthly website traffic that the startup gains. The better you understand your website’s traffic, the more confidence you will have that the implemented strategies are working, and that is precisely where the significance of measuring it resides.
In addition, having better control over this data will enable you to understand the audience, address their needs, fulfill their new demands, and consider what other sites like yours provide.
Also, knowing which pages website visitors visit the most can be useful when deciding if more “call to action” options are required to help get those visitors to convert into leads and reach you.
Website tracking is not only helpful in optimising a website but also for optimising an entire marketing plan.
- Inventory size
Inventory, indicating the total variety of products ready for sale, is one of the greatest assets of any business. But it’s wise to avoid having too little or too much inventory.
Too much inventory raises storage costs, increases the risk of waste, and implies that the startup’s funding is tied up. With insufficient resources, the startup would be unable to meet customer needs and risk losing clients to rival businesses.
Measuring inventory size will assist businesses in planning to buy within the capacity and simplify quick sales and delivery systems.
- High-Value customers
High-value customers are the individuals that keep coming back to purchase your product. They offer most of the revenue for your product/service and assist you in getting more clients through references.
In some sectors, retaining customers decides the future survival of the company.
If you monitor and keep a close eye on your high-value customers, you are much more likely to achieve success in your company. You can take steps to get consistent results over the period.
They will also be ready to provide you with testimonials which you can use to attract new consumers. It’s also simpler to upsell to these kinds of consumers. This critical business metric will assist you in growing your business.
- Staff productivity
For obvious reasons, it is crucial to monitor employee productivity. Your company is at risk from unutilised employees. A perception of trust without any supporting data that the employees are hard working can be deceiving and indeed not a great sign of a successful firm.
What should be tracked, and how should it be tracked? Look for a way to assign tasks and responsibilities first.
Any task management application can be used for this. Some businesses hire sophisticated project management tools created especially for their business. Every employee should have objectives, duties, and deadlines for achieving those goals.
- Customer acquisition
Being laser-focused on key customer metrics is always a brilliant idea because consumers are the lifeline of your startup. This involves Customer acquisition cost (CAC).
To calculate CAC, choose a period and divide your marketing and sales expenses by the number of new customers you acquired.
Startups should keep track of conversion rates as well as client growth statistics. Spending on advertising needs to produce results. Therefore, as a startup, you should monitor the return on your advertising investments (ROAS).
CAC is an essential metric for any company that uses marketing and sales to generate new customers. This includes brick-and-mortar businesses like supermarkets, professional services, and eCommerce firms.
Ultimately, the less you spend on gaining new customers, the larger your profit margins will be.
This guide showed how to grow your startup with different business metrics.
Since every business is different and everyone strives for success, it’s important to remember that rapid growth doesn’t necessarily indicate long-term success.
Instead, slower growth may allow you to monitor your startup company’s steps and identify what needs to change to achieve a successful outcome.
You can achieve more remarkable outcomes by tracking a small number of business metrics rather than chasing many and wasting time.