When you're a startup, keeping an eye on metrics and data is a essential habit to form. Figures and cold hard facts will give you the low-down on how your business is doing - but with a wealth of information available from Google Analytics, what are the stats you need to be looking at? Matt Doyle of Launchcloud, an innovative software company, shares his tips.
As a startup, success is not just going to fall into your lap; you have to perform in the right way to make sure you reach your targets and goals, and give your customers the product they want. Knowing whether you’re doing this can be the hard part. Since I began as a startup with Launchcloud I’ve learnt how important it is to track certain metrics, so that you know how you’re performing and what you need to improve.
If you don’t track your metrics as you should then you may as well be walking on a motorway with a blindfold on; you’re heading for potential disaster. Knowing the facts and figures means you have a better idea of what’s going to happen in the future and what you need to do to keep your performance and revenue on track. Here are the top seven metrics I would always advise start up owners to track.
If you track your sales metrics then you can see where you’re leaking potential revenue and you get to know if you’re likely to have a downturn in sales at any point during the year. If you don’t study your sales in detail you can’t prepare for any potential shortfalls and this can be a fatal mistake for many startups.
Tracking your churn metrics – aka the rate of customers leaving your product - means that you can see if your customer or revenue base is falling off and take action to resolve the problem. You can also identify patterns that may happen at certain times of year so that you can plan for them. Remember that you need to measure both revenue churn and customer churn, to give you the whole picture.
Enquiries or free sign-ups
Knowing the data around enquiries and free sign-ups for your product means that you can track the success of your marketing strategy. If you aren’t getting enquiries then you need to look at new ways to reach potential customers. Knowing the rates for your enquiries and free sign-ups also helps you to see how they compare with your retention so you can see how successful you are in keeping customers engaged.
Time using your product or service
This is another metric that shows you how successful your customer retention is. If you have high numbers of people who use your product for a short time then you need to look at why this is; pricing, customer service, product satisfaction levels? This can work the other way too. You may have a lot of long-term customers but little new custom. It could be that you’ve become a bit complacent with your marketing.
Growth month on month / recurring income
This one’s pretty obvious. If you don’t track growth and income levels you have no way of knowing whether you’re achieving your vision and business plans. As a startup you have to know whether the business is growing, it’s as simple as that.
Customer lifetime value
I’ve had a few conversations with people about the benefits of customer lifetime value (CLV) and we’ve always come to the same conclusion; it’s one of the most valuable metrics you can have. Acquiring a new customer is a lot more expensive than keeping one you already have. This is why it makes sense to put your efforts into marketing to customers who are likely to give the best CLV, the amount of value they add over the lifetime of your business. Tracking your CLV metrics helps you to see which type of customer is the best to target, in terms of ongoing value.
Customer acquisition cost
Customer acquisition cost (CAC) metrics need to be tracked in tandem with CLV metrics. The CAC is the total cost that’s involved in acquiring one customer; it’s basically your operating costs over a certain period divided by the number of customers acquired during that period. You can see that it’s essential for your CAC to be significantly lower than your CLV in order for your customers to add any actual value for your business. Keeping track of both metrics helps you to see if this is the case.
All of these seven metrics are important if you want to be able to keep track of the growth, revenue and success of your business, and as a startup we’ve found them all invaluable in helping us to keep on track. Good luck!