What are some of the most important startup metrics?

When you launch a startup, you need to consider what you will measure to check success. There are four which directly affect your company’s bottom line (courtesy of Kissmetrics):

1) Customer Acquisition Cost (CAC) – How much it costs to get customers on board?
2) Churn – Realising how many customers stop using your product or service.
3) Life-time Value – How much you can expect to earn from a customer over the time he/she is with your company? Logically, this should far exceed CAC.
4) Revenue – How much money flows into the company!

Startup metrics, photo credit to Flickr user RedPlasticMonkey

Metrics, photo credit to Flickr user RedPlasticMonkey (http://www.flickr.com/photos/redplastic/3878614398/)

After focusing on these startup metrics, think about the following:

5) Retention – Straightforward. Keeping your customers!
6) Product Metabolism – How quickly your startup makes decisions. This is crucial to your startup. Things move and change fast.
7) Viral Coefficient – Organic growth of customers numbers. Getting to organic growth is a challenge for many startups.
8) Activation – Conversion rate from ‘visitor’ to ‘customer’

Collectively, these startup metrics will greatly aid you in keeping track of your startup’s performance, singling out if any particular area requires improvement. Startups are unique – their metrics are not like those of established companies. The most important metrics for a startup may be quite different. Take time to think about what you are trying to achieve with your company.

In the sharing economy, network and community effects can be very powerful indicators of your succeed. Factor this into your thinking as well. Are new users bringing in even more new users? Are new users getting connected to existing users? Also, in the sharing economy, every user is a potential participant in the marketplace. But how many are actually activated? How many are buying, selling or engaging in transactions. This is a key startup metric in the sharing economy.

Focusing on the right startup metrics early can help you succeed.