Tips for using growth KPIs for growth hack solutions
Running your own startup can be exciting and extremely lucrative but only when you know what indicators to look for and capitalize on. However, this process can be tricky as you need to continuously track your growth then figure out which areas you need to focus on and expand. There are certain key performance indicators (KPIs) that you can track and follow for higher chances of success.
But what are KPIs? And which ones do you need to track to increase profits and achieve your startup’s goals and objectives? Read more here to find out.
A KPI is a measurable piece of data that collects and interprets certain information. This information can then be altered, changed or set to achieve specific goals, progress and/or levels of production. Moreover, a KPI is not industry-specific and it can be assigned for a wide variety of information including customer trends, customer lifetime value and so on.
There are around 1,000 trackable KPIs for any business. We will be narrowing them down for you to the essential 8 your startup needs to track.
Your investors want to know how much money you are making. The gross profit KPI measures just that. Usually, the gross profit KPI includes metrics associated with costs such as manufacturing, delivery and product/service supports. These metrics are important in demonstrating cost vs. revenue and thus profits.
Customer lifetime value
Your customer’s LTV is another extremely important metric you should track as it follows the money and shows you the totals generated from each customer. To calculate this number, you need some number crunching. Your equation should should be similar to the following example:
CTLV = Gross Margin % (1/Monthly cancellation %) x Average Monthly Customer Revenue
Customer acquisition cost
To find the perfect balance between profits and customers, you need to also track the customer acquisition cost KPI. This metric is an indicator of how much time you need to spend to hook your customers and het them to make a purchase. Here are the three main components to hep you calculate this KPI:
CAC = Total Cost of Sales + Total Marketing Expenses / The Number of New Customers Obtained
Active monthly users
This particular KPI helps you determine engagement with your brand and/or its offering. The engagement includes collecting daily rewards from an app, connecting with other users or even logging into an account. This metric sheds a light on the number or users who have used your app, product, service or platform. Moreover, it guides you to the ways you can increase customer engagement and retention.
User activation rate
The user activation rate metric is very crucial in determining if customers are using your services, what is drawing them to you and what bonds they are forming with your brand. You can measure this metric through the number of visitors to your site, number of clicks as well as downloads, signups and so on.
How can you show your value and growth month after month? You use the month-over-month growth metric. This KPI will help you determine fluctuations in your business and shows you directional outputs of your business. Click here for a detailed description on calculating the MOM metric.
The viral coefficient
Are your marketing efforts efficient? How quickly are they brining in new customers? The viral coefficient metric is the answer. To calculate it, you need to multiply your existing customer base by your average sent invitations. You then need to multiply the result by the invitation conversion rate and divide by your existing customer base. Any result above the coefficient of 1 means that you are experiencing exponential growth.
One of SEO’s main goals is generating non-paid or organic traffic. Organic traffic is one of the most important KPIs as it can make or break a campaign. But how do you get organic traffic? It all boils down to interesting, unique and engaging content. Moreover, since organic traffic cannot be automated, you need to carefully measure it to determine growth and success opportunities.
Finally, are you really leading your startup to success by following, tracking and measuring the right KPIs? What do your KPIs say about your progress? Don’t hesitate to share with us your thoughts and insides about this invaluable topic in the comment section below.