Metrics to Manage a healthy business

 #GuestPost from #GrowthSchool

Image courtesy:  ntaskmanager.com

One of the biggest reasons why startups fail is that they don't track the right metrics from the beginning

Here are 25 metrics that  a successful entrepreneur tracks on a daily/ weekly basis at Growth School

𝗢𝘃𝗲𝗿𝗮𝗹𝗹 𝗛𝗲𝗮𝗹𝘁𝗵 𝗠𝗲𝘁𝗿𝗶𝗰𝘀 :

1. CSAT : Customer Satisfaction score usually rated from 1-5

We track different CSAT for products, content, mentor, and programs.

2. ARR : Annualised Revenue Rate ( usually for non-SaaS brands which are not recurring )

3. Gross Margin ( GM ): Revenue - Fixed cost for the product

4. Contribution Margin ( CM ): Gross Margin - Cost of marketing and sales Different brands track this differently and can split it into CM1, CM2 , CM2 so on

5. EBIDTA : Money made after all deductions ( excluding taxes and depreciating assets )

A great metric for measuring profitability.

6. Burn Rate: Total spend per month ( can be measured based on % of revenue vs total burn as well )

7. Runway: How long will the VC money last considering the current burn rate

𝗨𝘀𝗲𝗿 𝗟𝗲𝘃𝗲𝗹 𝗠𝗲𝘁𝗿𝗶𝗰𝘀 :

8. LTV : Lifetime value of the customer

Total predicted spending a customer will make over his lifetime of using the product. This is hard to measure for early-stage startups.

9. LTV : CAC : Ratio between LTV to CAC

Probably the most important metric for investors and the health of the business. A good ratio is 4 and above.

𝗦𝗶𝗻𝗰𝗲 𝗟𝗧𝗩 𝗶𝘀 𝗵𝗮𝗿𝗱 𝘁𝗼 𝗺𝗲𝗮𝘀𝘂𝗿𝗲 𝗳𝗼𝗿 𝘂𝘀, 𝘄𝗲 𝗺𝗲𝗮𝘀𝘂𝗿𝗲

10. AOV : Average order value ( Single purchase )

11. AOV : CAC : Ratio between AOV to CAC

A much more aggressive metric to measure vs LTV : CAC but tells a lot about health of the business

We have also started to measure

12. ARPU : Average revenue per user ( Avg no orders per user * Avg order value )

13. ARPU : CAC : I am sure you can guess what this is by now.

14. AOPU : Average number of orders per user

15. ROAS : Return on ad spend - Total revenue from ads / total ad spend.

𝗠𝗮𝗿𝗸𝗲𝘁𝗶𝗻𝗴 𝗠𝗲𝘁𝗿𝗶𝗰𝘀 :

16. CAC : Cost of Acquisition - cost to acquire one user

17. Paid CAC : Cost of Acquisition from paid channels eg fb ads, google ads etc

18. Blended CAC : Average Cost of Acquisition from all channels ( Eg: Paid + Organic + Referral )

19. Click to LPV : % of users click on ads and land on the Landing page

Yes, not everyone who clicks lands on the landing page. We try to hit 80%

20. CPLPV : Cost per landing page view

21. Cost of ATC : Cost for adding to cart

22. LPV to ATC : % of users who click on add to cart from people to land on the landing page

23. ATC to Purchase: % of people to eventually buy after adding to cart

24. CPA : Cost per action

25. CVR : % Conversion Rate

While these might not be everything that we measure, as there are many different metrics individual teams measure,

Looking at these metrics as a founder gives a good idea of how the business is doing on a DoD, WoW and MoM basis.

What important metrics do you measure daily in your job or running your business?