Growth cannot be measured on a single parameter for the startups. It may give a false sense of scale-up that can lead to some disastrous decisions. Premature scaling is the primary reason for the failure of startups.

Not only for the growth, but you also need different metrics to evaluate your current strategies and make changes to them. You will lose money even with sales in the absence of a proper system to track numbers. Moreover, productivity will not remain at its peak unless the performance is measured.

If you don’t want your startup to leak productivity and lose some great opportunities, here are some metrics to use for strategizing.

1.      Customer Acquisition Cost

Customer acquisition cost is the average money the startup spends to convert a lead into a customer. It defines the efficiency of your marketing campaign and sales team. The decision making for different content types, marketing campaigns, and advertisement is also simplified.

You can compare the performance of each method based on the revenue generated from it. It is easier to compare the acquisition cost with the lifetime value of the customers. Higher CAQs should not be a problem if the customers are returning more value with the current strategy.

2.      Average Revenue Per User

The average revenue per user calculates an average return from the customers. The ARPU may differ from individual to individual based on their purchase. It will help the startup to compare profits from customers for a time duration.

You can then compare the value with the competitors or expectations during the planning stage. The best channels for the acquisition will be highlighted with higher average revenue from them. It is also helpful in forecasting the profits of upcoming months based on data of previous months.

3.      Customer Lifetime Value

Customer lifetime value is an estimation of the revenue from a customer in their lifetime. This is a pure expectation based on previous orders and similar customer profiles. It helps strategize for different customer profiles and marketing channels.

The high-value customers are more important to retain with some special offers. The retention cost should never exceed the profit from a customer profile. Also, you will find the best-performing products and services to increase focus on the under-performing items.

4.      Overhead Cost

Overhead costs are the expenses required to run a business, but you cannot classify them under service, product, a portion of the income, or business activity. These may include outsourcing services, depreciation, insurance, and taxes. These costs never return in a direct profit, even though they are critical for the business to run.

You need to calculate them to keep track of the capital and funds. It may help you curb some expenses with cost-cutting measures. Also, you will come to an estimation to take business loans for bad credit.

5.      Monthly Active Users

Monthly Active Users is one of the key performance indicators for the websites and social networking companies to measure unique visits each month. Only the users visiting the first time in the time frame is considered while calculation MAU. The number is then used to create different metrics and compare site performance.

Your marketing campaign on different platforms plays a critical role in increasing unique clicks. You can assess the performance of each platform to make some changes in the strategy. The performance, popularity, and growth of the website are easy to determine with the help of these metrics.

6.      Activation Rate

Businesses use the activation rate to find the total number of new users within a time frame. The new users are considered active when they perform the desired action, such as creating an account or buying some product. These metrics give an insight into the company’s performance in the early stages of the customer lifecycle.

Your efforts and target audience determine the success of a campaign. Therefore, evaluate the two factors if they activate rate is low. Moreover, it is not relevant in every industry that makes its application limited.

7.      Monthly Recurring Revenue

The regular revenue for the startup is calculated in the monthly recurring revenue. It includes rent, subscriptions, and contracts from customers and tenants. Unlike sales, they are steady in nature and should be mentioned with different metrics in the reports.

You can rely on these income streams to make more significant financial decisions. They are easier to forecast, and there is no dependency on the seasons. It should increase over the years with the inclusion of new customers and investment in the recurring revenue.

8.      Customer Retention Rate

You may have heard that “it is cheaper to retain a customer than converting a new one”. This is true since retention only takes quality service and timely response to their complaints or requests. Customer retention rate helps you find the retained users after remove the new sign-ups from the active users.

A low retention rate is a serious concern for the businesses as it means the customers are not satisfied. Even though the services and price are good, the competitors may have been doing something better than you. Therefore, start the research on why a low retention rate before the startup loose way too many customers.

Conclusion

In the end, there will be more metrics based on your industry that will streamline the decision-making process. The numbers are more reliable when compared to gut feeling in the business world. Moreover, the stakeholders will trust your leadership if the startup is performing well in these metrics.