Key Metrics Every Startup Needs to Measure

As a startup founder, it can be very tedious to build and scale a successful startup; from trying to secure investment, correctly allocating the budget, building a team and keeping track of key business metrics, to achieving the business’s long-term growth ambitions.

For any startup to grow, you must keep a close eye on your key business metrics. 

The truth is, there are many metrics to look out for, and this can cause confusion on which key metrics to keep track of.

That’s why we’ve put together this guide on the key startup metrics that you should be tracking as a founder.

So which metrics should you pay attention to?

The Key Metrics to Track for Startups

1. North Star Metrics

Your north star can be said to be your ‘why’; your reason for setting up, the goals you intend to achieve, and the difference you intend to make.

Putting it into other words, the North Star Metric is a measure of the most critical outcome of success for the product.

For any metric to be regarded as a “North Star,” such metric must have three important things: 

• lead to revenue, 
• reflect customer value, and 
• measure progress.

2. Customer Acquisition Costs (CAC)

Your customer acquisition cost (CAC) is the amount you spend in order to acquire a new customer.

As a startup, it is important to keep track of your CAC as it helps you know how effective your marketing and sales process are.

It also helps to know if too much money is being spent on acquiring new customers, but if it’s too low, it could mean that you’re not spending enough to reach new customers.

3. Cash Burn Rate

Your Cash Burn Rate describes how quickly your startup uses up its cash reserves within a specific period of time.

Burn rate is usually used to calculate “cash runway”, which is the amount of time your business has left before it runs out of money.

The gross burn rate and net burn rate are the two types of burn rates. These two burn rates are usually calculated for one month so that a company knows its monthly expenses.

4. Customer Engagement 

As a startup, it’s important to define what being an “active” user means when tracking customer engagement. 

Your customer engagement metrics should track the number of unique users who engage with a startup’s product over a specified time frame.

Tracking and evaluating your customer engagement on a daily and monthly basis helps you to determine and estimate your revenue potential.

5. Customer Lifetime Revenue

Your Customer Lifetime Value (CLV) measures the revenue an individual customer brings in throughout their relationship with your product or service.

It’s an estimate of how much you can or should be expected to make from each newly acquired customer.

You can get the formula to calculate CLV here

6. Churn Rate

Churn Rate is used to define how many of your customers are leaving your business at any given time period.

Calculated in percentage, the Churn Rate metric can be measured either daily, weekly, monthly or annually, depending on the type of business or product.

7. Revenue

Most startups are found to generate some form of revenue except you’re a non-profit organisation. 

Key revenue metrics can either be (monthly recurring revenue (MRR) which is the amount of revenue your startup makes and reoccurs every month; or (ARR)  which is annual recurring revenue meaning the amount of revenue that recurs annually.

In conclusion

Note that, keeping track of any of these metrics, will help you to better understand how well you are doing in terms of profitability, identifying areas for growth, and ultimately keeping your business on track for success.

Therefore, it’s important to keep an eye on these metrics on a regular basis so you can always take proactive steps or decisions for your startup growth.