Key Performance Indicators for Startups

In the early stages of a startup, it's easy to get caught up in vanity metrics, like website traffic or social media followers, but these don't always reflect real progress. For startups aiming for growth, focus on metrics that truly matter: Customer Acquisition Cost (CAC): How much does it cost to acquire a new customer? Reducing CAC while increasing revenue is a key sign of efficiency. Lifetime Value (LTV): What’s the total revenue you can expect from a customer over their lifetime? A high LTV to CAC ratio shows long-term sustainability. Monthly Recurring Revenue (MRR): For SaaS or subscription-based models, MRR provides a clear view of consistent revenue growth. Churn Rate: Are your customers sticking around? High churn is a red flag that you need to refine your product or retention strategy. Customer Retention Rate: The flip side of churn, this metric shows how well you're keeping your customers engaged and satisfied. Growth Rate: Ultimately, how fast is your business expanding? A steady growth rate indicates that you're on the right path to scaling. These metrics give investors and founders a better sense of real performance and sustainable growth. The key? Tracking them early and adjusting course before it's too late. What metrics do you focus on in your startup? #startups #growthmetrics #businessstrategy #scaling #entrepreneurship #venturecapital #privateequity

A question I get from entrepreneurs from time to time is to look at past board decks from other startups. Board decks are a normal part of venture-backed startups and help align the executive team, the entrepreneur, and the investors on a quarterly basis. Now, decks don't have a defined standard, so they are a little bit all over the place. But the best ones capture what's going well, what's not going well, the strategy, plans, and, of course, metrics. On the metrics front, one thing I've seen more frequently — but never saw over the first 10 or 15 years — is KPI definitions. Board decks include a variety of performance indicators and metrics, but just because it says "recurring revenue" or "gross renewal rate" doesn't mean it's measured the same way everyone else measures it. The trend now is to include KPI definitions at the end of the deck that outline each KPI, the unit of measurement, and how it's calculated. Here's a list of common board metrics: Corporate - ARR - Net new ACV - Net dollar retention - Gross dollar retention - Operating margin (Op margin) - Burn rate - Days to zero cash Marketing - Signups - Marketing qualified leads - Sales qualified leads Sales - Sales new ACV - Sales efficiency Customer Success - Managed portfolio efficiency - MP NDR (Net dollar retention) - MP GDR (Gross dollar retention) - CSM carry (ARR per CSM employee) Customer Support - Cost per case - Cost per MAU - Case close via automation - Support CSAT R&D - Plan / Do - Say / Do - Cycle times - Availability Finance - Expense actual to forecast - Days to close books - Net New ACV actual to forecast - Revenue actual to forecast People - Voluntary attrition  - New hire attrition - New hire starts - Exits Entrepreneurs would do well to include KPI definition slides at the end of their board decks to ensure that everyone is on the same page and the metrics are calculated in a way that is readily understood and, ideally, aligned with industry standards.

𝐒𝐭𝐚𝐫𝐭𝐮𝐩 𝐒𝐮𝐜𝐜𝐞𝐬𝐬: 𝐇𝐚𝐫𝐧𝐞𝐬𝐬 𝐭𝐡𝐞 𝐈𝐧𝐬𝐢𝐠𝐡𝐭𝐬 𝐨𝐟 𝐊𝐏𝐈𝐬 𝐄𝐚𝐫𝐥𝐲 & 𝐎𝐟𝐭𝐞𝐧 Founders may be driven by passion - but should be influenced by facts. Peter Drucker said, ❝𝑰𝒇 𝒚𝒐𝒖 𝒄𝒂𝒏'𝒕 𝒎𝒆𝒂𝒔𝒖𝒓𝒆 𝒊𝒕, 𝒚𝒐𝒖 𝒄𝒂𝒏'𝒕 𝒊𝒎𝒑𝒓𝒐𝒗𝒆 𝒊𝒕.❞ While key performance indicators (KPIs) may feel like a distant need in startups, capturing the right metrics helps: 1️⃣ navigate fast-paced market dynamics 2️⃣ encourage agility and profitability, and 3️⃣ extends cash flow Even if you initially lack sophisticated systems and software, tracking critical metrics will best verify your experiments and inform decisions. Here are some examples of valuable startup metrics: 𝘊𝘶𝘴𝘵𝘰𝘮𝘦𝘳𝘴. Strong satisfaction impacts retention, upsells, cross-sells, and referrals, leading to growth and profitability. Ideally, use AI tools to seek and track customers' sentiment across multiple platforms. Otherwise, ask customers via email, surveys, and focus groups. 𝘐𝘯𝘯𝘰𝘷𝘢𝘵𝘪𝘰𝘯. How many new products and services have you launched recently, and how are they affecting your business? If possible, measure revenue from new products or services within the last year to encourage continuous innovation and adaptation to market needs. 𝘌𝘮𝘱𝘭𝘰𝘺𝘦𝘦𝘴. Your team's engagement prompts customer satisfaction, product innovation, and process efficiency. Team costs are incredibly high, so assign tasks immediately after hiring to measure performance and ensure responsibilities align with company goals. 𝘍𝘪𝘯𝘢𝘯𝘤𝘪𝘢𝘭𝘴. Ensure you incorporate industry and business metrics into your discussions e.g. a SaaS company should capture CAC, LTV, churn, etc. Also, scrutinize revenue streams to encourage revenue diversity and pricing models to balance profitability with growth. 𝘊𝘰𝘮𝘮𝘶𝘯𝘪𝘵𝘺. Measure social media activity leading to sales. Do your best to attribute engagement to revenues. Second, track user communication in forums, webinars, and other platforms. How do they talk about your brand publicly? 💡 Virality and referrals will optimize growth with minimal cost. Experiment ways to increase referrals e.g. new messaging, incentives, and campaigns. 𝗚𝗲𝘁𝘁𝗶𝗻𝗴 𝗦𝘁𝗮𝗿𝘁𝗲𝗱 You may think your startup is too busy and bootstrapped to measure results and outcomes. However, these insights will be a necessary input to growth. Start by constantly measuring available information, asking stakeholders questions, and always challenging and testing assumptions. Feedback helps you respond to changes and identify opportunities. Objective metrics clarify how we will grow, prevent us from succumbing to biases, and keep us experimenting to be agile as markets shift. #leaders #founder #adapt #startups