If you are a startup, you have a lot of work to do. You need to determine which of these jobs you should do first and which job you should prioritize. You should accelerate your business by managing it differently from large companies, and bring it to the point where it can scale and grow rapidly. So, in this content we have prepared there are metrics that many successful startups around the world use and follow. We will try to be useful and inspire you by giving you information about these metrics. If you’re ready, let’s start!
What Metrics Should a Startup Track?
In addition to the metrics that startups should follow in general, you need to integrate category and business model-specific metrics into your own business. A startup has to find and explore the metrics and statistics that best describe and summarize its business. Therefore, you should explore the metrics we have presented for you below and determine the most beneficial one for you.
Metrics for Startups
We will start our series in which we evaluate the most valuable metrics for startups, first with sales and marketing-oriented metrics, and then we will try to help you with operational metrics.
Customer Acquisition Cost
Customer acquisition cost is one of the most valuable metrics. It refers to the marketing cost you spend while acquiring your customers. For example, if you spent $1,000 on internet ads and 2 customers came in, your customer acquisition cost is $500. You should also do this metric by adding up all your marketing spend. For example, you spent $10,000 on your employees or service provider for SEO, social media and advertising management. However, you spent $20,000 on different channels on internet ads. If you got 30 customers after the $30,000 you spent in total, your customer acquisition cost is $1,000.
While calculating the customer acquisition cost, you can access data that will determine which marketing channel is better. For example, among Google Ads, Instagram and Youtube ads, you may decide to invest more in that channel, whichever has the lowest customer acquisition cost.
Customer Lifetime Value
Customer lifetime value is one of the most important metrics for a startup to test and develop your product. If you regularly calculate and improve customer lifetime value, you can improve your business, your product.
Customer lifetime value can be expressed as the total return from a customer to you. If you are selling a one-time product and the customer does not buy from you again, this is the amount of the product sold. For example, if you sell a product for $100 and the customer does not buy that product from you repeatedly, your customer lifetime value is $100. However, this is not a one-off situation, but recurring purchases occur. Therefore, calculating customer lifetime value is a bit more complicated. For example, if you are an e-commerce company, if your customers buy products from you and buy some of them again after 2 months, your customer lifetime value is more than $100 you sold. If you are selling with a monthly recurring subscription model or if you have a SaaS business model, what you need to calculate is how long a customer is left with you. If customers stay with you on average for 5 months and then don’t continue, your income of customer earning is the amount you receive per month x the average length of stay of the customer, as in this example, 5.
Just as it is important how long your customers stay with you, how many customers leave you that month, stop using the product, you need to have information about that. The customer churn rate is a metric you should keep every month. As the product improves, the customer churn rate decreases.
To calculate the customer churn rate, you can find the number of customers you lost that month from your total number of customers. For example, if your total number of customers is 100 and the number of customers you lost that month is 5, your customer churn rate is 5. In successful startups with a SaaS business model, this rate is around 5%.
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Although website traffic is simple compared to other metrics, it is a metric that should not be underestimated. You should regularly check your website traffic every month and track the progress through a tool like Google Analytics.
You should get website traffic as monthly unique visitors. The number of page crawls is not the same thing. You should base on the number of monthly unique users coming to your website.
Social Media Followers
In order to understand how much your brand has grown, you need to pay attention to how much your social media followers increase every month. Especially if you are doing a business specific to Instagram and have a b2c business model, you should check your social media follower counts every month and take notes.
Social Media Engagement Rate
Social media engagement rate is also a metric that should be important for marketing startups. How good are you on social media you can use this metric to check your content production.
To find the social media engagement rate, you should divide your number of followers by the average number of likes of your last 3 posts. For example, if you have 1,000 followers and your last 3 posts were liked 100 on average, your engagement rate is 10%. If you can improve your content and create more interesting content, your social media interaction rate will increase.
Return of Investment (ROI)
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Unlike customer acquisition cost, this data only serves to determine how much return you get from advertisements. For example, people who come to you as customers without spending any advertising are not included in this metric. Only the metric in the channel you spend on advertising is based on and plays an important role in how much you earn.
To find our ad return metric, we need to know the return we get from a customer, namely the LTV (lifetime value) metric. For example, if we earn $10 from a customer and spend $1 in advertising to bring the customer, our ROI is 10. That means we earn 10x from each ad. We need to build our ROI numbers on a monthly basis and calculate our advertising budgets based on these numbers.
Page View and Bounce Rate
Page Views and Bounce Rate is very important for your startup. One of the most important things to understand about your startup is the website. Your website is the face of your business, so you have to go out of your way to make sure that people who are first-time visitors of your website will keep coming back again. This is why page views and bounce rate is significant to your website’s success.
Bounce rates are the number of people who visit your site but exited the page within a short amount of time without buying anything or availing of any information. What does this mean? When your page has very high page views, but it only gives information or just sales like the “What’s New” page, it means that 90% of your visitors just exited the page before they got to the “Offers” section. This means that in order for you to have a successful website, you need to have high page views, but you also need to make sure that they will stay on your page after they have left.
If your bounce rate is high, then this means that most of your visitors are not interested in what you are offering them. They just found your site by searching in a search engine and found no helpful information, so now they are just going to another website that might be better. To prevent this, you need to improve your page views and bounce rate. And I bet that you will be surprised with the results once you get to know your website better.
In this content, we tried to explain the metrics that startups should pay attention to. We hope it was useful for you. You can also share with us what you wonder about this subject, and send your questions and opinions to the Earnado team at any time. You can view our SEO, social media and advertising management works that we have prepared for start-ups, and you can join on a successful digital marketing journey with Earnado.