The Top 15 Key Performance Indicators for Startups to Track

As a startup founder it can be challenging to determine which metrics and key performance indicators (KPIs) to focus on. With limited resources and time, you need to identify the vital few KPIs that will help you understand and grow your business.

In this comprehensive guide, I’ll walk you through the 15 most important KPIs that every startup should be tracking. Monitoring these metrics will provide invaluable insights into your product-market fit, growth, customer engagement, and financial health.

What Are KPIs and Why Do You Need Them?

KPIs are quantifiable measures used to track and assess the performance of a business against its strategic goals and objectives. For startups, metrics serve several crucial purposes:

Evaluate product-market fit
Understand customer behavior
Identify growth opportunities
Optimize operations
Inform strategic decisions
Benchmark performance
Track progress towards goals

In simple terms, KPIs help startups understand what’s working, what’s not, and where to focus their limited resources for maximum impact Rather than making gut-feel decisions, data-backed KPIs enable startups to make strategic, informed choices

15 Must-Track KPIs for Startups

Here are the top 15 KPIs that startups should monitor right from their early stages:

1. Customer Acquisition Cost (CAC)

CAC refers to the average cost incurred to acquire a new customer, It’s calculated by dividing total acquisition costs in a period by the number of customers acquired in that period

CAC = Total Customer Acquisition Costs / Number of New Customers

Tracking CAC lets you identify your most profitable acquisition channels so you can double down on them. A low CAC is ideal in the early days to achieve scalability.

2. Customer Lifetime Value (CLV)

CLV is the total revenue a customer contributes during their entire relationship with your startup. It’s a measure of customer profitability and churn risk.

CLV = Average Order Value x Purchase Frequency x Customer Lifespan

If CLV > CAC, customer acquisition is profitable. As CLV increases over time, your startup becomes more sustainable.

3. Monthly Recurring Revenue (MRR)

MRR is the amount of recurring subscription revenue you generate each month. This metric is especially relevant for startups with SaaS or subscription models.

Monitor month-over-month MRR growth to understand the health of your recurring revenue streams. MRR churn should also be tracked separately.

4. Monthly Active Users (MAU)

MAU is the number of unique users who interact with your product in a 30-day period. It indicates customer engagement and satisfaction.

For mobile apps, MAU relates to users opening the app at least once in 30 days. For web products, it could be users logging in or taking key actions.

5. Churn Rate

Churn rate indicates the percentage of customers you lose in a month.

Monthly Churn Rate = Customers Lost in a Month / Total Customers at Start of Month

A high churn impedes growth, so tracking this metric helps identify causes for churn and retention opportunities. Ideally, aim for under 5% monthly churn.

6. Customer Lifetime

The average length of time a customer remains with you before churning. Longer lifetimes signal greater customer loyalty and satisfaction.

Analyze metrics like repeat purchase rate alongside lifetime to understand engagement. Life-time also helps forecast CLV.

7. Traffic Sources

This indicates where your website traffic is coming from – direct, organic search, social media, referrals, etc.

Identify your best-performing channels for lead generation and focus your marketing efforts accordingly. Traffic sources reveal how customers are discovering you.

8. Bounce Rate

Bounce rate is the percentage of website visitors who enter and exit from a single page without any further interactions.

High bounce rates indicate website navigation issues, poor page load times, or lack of engagement. Track landing page-specific bounce rates to identify problem areas.

9. Conversion Rate

Conversion rate is the percentage of visitors who convert into leads or customers on your website.

Conversion Rate = Total Conversions / Unique Visitors

Optimizing conversion at every stage – from lead to customer – is essential. Analyze conversion rates to create frictionless user experiences.

10. Net Promoter Score (NPS)

NPS measures customer satisfaction and loyalty through a single question: “How likely are you to recommend our product to a friend?”

Scores range from -100 to 100. An NPS above 50 is considered excellent. Monitor NPS trends to see if your product and customer service are improving.

11. Customer Satisfaction (CSAT) Score

Similar to NPS, CSAT measures satisfaction among your customers. It’s tracked through a survey question: “How satisfied are you with our product/service?”

CSAT is scored on a scale of 1 to 5, with 5 being the highest satisfaction level. When it drops, quickly address pain points.

12. Account Utilization

This ratio indicates the percentage of product features customers actively use.

Account Utilization = Features Used by Customer / Total Features

Low utilization signals poor fit or improper onboarding. Identify underutilized features to improve or remove them to simplify.

13. Sales Cycle Length

Sales cycle length measures the average time taken from first contact to close a deal. A shorter cycle indicates higher efficiency.

Analyze lengths by acquisition channel and customer segment. Lengthy cycles reveal roadblocks in the sales process.

14. Customer Support Tickets

The volume of support tickets indicates problems customers are facing. Track ticket categories to identify recurring issues and bugs.

High ticket volume can also mean friction in the onboarding or UI. Address these promptly to boost satisfaction.

15. Burn Rate

Your monthly burn rate is the net amount of cash being spent to sustain operations.

Burn Rate = Total Operating Expenses – Total Revenue

Carefully monitoring burn rate helps you understand your cash runway and make adjustments to prolong it.

How to Track and Measure KPIs

With the key metrics identified, let’s look at tips to effectively track and measure them:

Pick a business intelligence tool

Use dedicated platforms like Google Analytics, Mixpanel, Amplitude, or Klipfolio to track your startup KPIs. These tools make measurement easy through custom reports and dashboards.

Set up event tracking

Install tracking codes on your website to capture user events and behaviors. Track events that align with your KPIs, like signups, purchases, and clicks.

Leverage goal and funnel reporting

Many analytics tools allow you to define goals and conversion funnels to measure performance. Monitor funnel drop-off rates to identify friction.

Build custom reports

Create reports focused on each KPI to easily monitor performance daily or weekly. Schedule email delivery for regular insights.

Set targets

Define specific targets for each metric based on past data and industry benchmarks. Targets help assess progress.

Monitor regularly

Review KPI reports frequently – at least weekly. This allows you to spot trends and anomalies quickly.

Segment data

Slice data by parameters like channel, geography, source etc. to uncover deeper performance insights.

Optimize strategically

Use insights from KPIs to identify issues and opportunities. Double down on successes.

Tracking the right KPIs provides startups with extreme clarity on what’s working well and what’s not. But data without direction is useless.

The key is to constantly reflect on the insights, trends and anomalies highlighted by your metrics. Then optimize your product, marketing and operations accordingly.

While the KPIs listed above are a great starting point, each startup’s ideal metrics differ based on their business and growth models. So start with these 15, then refine your list as your needs evolve.

The goal should be to create a dynamic dashboard that provides complete visibility into the health and progress of your startup. Master these KPIs, and you’ll be able to confidently identify risks, capitalize on growth opportunities and ultimately build a stronger, sustainable business.

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Top KPIs for any startup

The specific metrics that drive any business will differ from startup to startup, and very few first-time founders are likely to understand them from the get-go, says Efrat Kasznik, president of Foresight Valuation Group. But they must do the work to identify those inputs so they can calculate some basic KPIs that every founder should know.

Revenue, cost of goods sold and profit margins. During your company’s earliest days, you may not have built your product, much less know what customers might be willing to pay for it or how many units you’ll be able to sell. But it’s never too early to start thinking about these basic KPIs to understand whether your business will be viable. Estimating revenue — the price of what you sell multiplied by the number of units you expect to sell over a certain period — and the fixed and variable costs of generating that revenue is the starting point toward figuring out your expected profit margin. It will also help you approximate your burn rate — or cash flow, if you are actually able to bring in more than you spend.

Unit economics. Knowing the price and cost of what you sell, however, will only get you so far. To understand whether you have a shot at building a sustainable business, a key will be your unit economics. Whether you sell smartphones or monthly software subscriptions, this term refers to the profit you earn on each unit sold.

Figuring this out is always complex, but can generally be boiled down to a simple formula consisting of three critical KPIs. One is the lifetime value of a customer (LTV), or the amount the average customer will spend with you over time. To determine LTV, you must divide the average spend of a customer over some time (month, quarter or year) by your churn rate, or how frequently customers stop buying from you. Next, dividing the LTV by the customer acquisition cost (CAC) — the amount you spend on marketing, promotions and incentives to win a new customer — provides you unit economics and a basic outlook on profitability. h 8 cij. png

There is no single answer for what values these KPIs should have to prove your business is viable. But a rule of thumb is that if your LTV divided by your CAC is less than three, the business may not be worth pursuing because it may take too long for the company to become cash flow positive. Also, investors get nervous if the payback period, or the time it takes to recoup the CAC, is more than 12 months.

Only by knowing a startup’s unit economics can its founder understand how long it will take the company to reach profitability — and can investors know if they want to provide enough funding for it to survive that long. “The long-term survival of your company depends on it,” says Kasznik.

Total addressable market. VCs follow a swing-for-the-fences model: It’s ok for them to miss (lose their investments on startups that fail) if their hits are big. That means they’re going to want to make sure the market your startup is going after is large enough to be worth their time and dollars.

There are two main ways to estimate your total addressable market: top down and bottom up. In the former, you use industry data to put contours on what you’re going after — say, urban transportation, productivity software or online groceries — and adjust that by the percentage of the market you can realistically aspire to capture. In the bottom-up approach, you make estimates of how many products you can build and sell, based on things like your capacity to deliver and your distribution strategy.

It’s important to be both realistic about these projections and understand your audience. In Silicon Valley or New York, many VCs will nod off if you say your total addressable market is less than $1 billion. On the other hand, if you are building a product or service for the domestic market in Australia or the United Kingdom, the same claim could get you laughed out of the room. Similarly, if your business model rests on selling something to every school or hospital in the region you are targeting, you’re not likely to get the funding or valuation you want. In other words, it’s okay not to be sure about your numbers, but you have to tell a believable story.

Cost of growth. As they project into the future, many first-time founders fail to factor in the costs they will need to incur to support growth, says Kasznik. That includes not just the advantages of growth — such as those volume discounts that Tondon discovered — but by far the biggest cost for most tech startups: employees. Median annual salaries for IT professionals can be steep — $82,000 in Austin, $94,000 in Boston, $103,000 in Washington, D.C. and $110,000 or more in Seattle or San Francisco, for example — not counting benefits. Even in lower-cost locations, payroll frequently exceeds 60 percent of a startup’s costs.

Setting KPIs and Goals | Startup School

What are key performance indicators?

Key performance indicators are values that companies can use to measure their growth and determine areas of improvement within their operations. Startup companies may use key performance indicators to help them increase their brand awareness, boost their sales and help sustain their finances.

What are startup metrics & key performance indicators?

Startup metrics and key performance indicators (KPIs) are important to understand and keep track of so your startup can measure, analyze, and grow your business using data, rather than blindly trying to grow. But not all key performance indicators were created equal.

What are key performance indicators (KPIs) for startups?

For startups, making informed decisions based on data is crucial for success. Key Performance Indicators (KPIs) are essential metrics that help startups measure their progress, identify areas for improvement, and guide them toward achieving their goals.

Why do Startups use key performance indicators?

Businesses use key performance indicators to measure their value and success. Startup companies may use them to find ways they can expand their sales and achieve sustained financial health. If you’re part of a startup company, learning about key performance indicators may help you measure goals and advance your workplace’s growth.