Data-Driven: 8 KPIs That Can Power Your Startup Growth Strategy (with examples)

Startups are a dime a dozen these days. In fact, startup growth has been on the rise since the early 2000s, but startup mortality rates have also risen over that same period of time. This is because many startups fail to grow and sustain their business due to a lack of data-driven decision-making. If you want your startup to thrive and grow, it’s imperative that you track key performance indicators or KPIs so you can make strategic decisions about how best to scale your startup’s growth strategy.

In this blog post we will discuss 8 KPIs:

• Customer acquisition cost (CAC)
• Average revenue per user (ARPU)
• Customer lifetime value (LTV)
• Monthly active users (MAU)
• Customer churn rate (CCR)
• Monthly recurring revenue (MRR)
• Revenue growth rate
• Revenue churn rate (RCR)

Understand Startup KPIs

Metrics are data points that represent the outcomes of a specific activity. They’re used to assess growth and find areas where your company can improve. Note that KPIs differ from startup metrics. Downloads of a particular template from your blog might be considered a metric.

A KPI could be the number of people who have tried something on your site because of that download. That metric is important to know, but it’s not related to the growth goals you have set for new customer sign-ups.

Why is it important for every startup to measure and track KPIs?

Your startup is only as good as its ability to grow.

Startups that measure and track KPIs are better able to understand the health of their startup in terms of growth, revenue, customer acquisition rates, etc. This enables them to make informed decisions about how best to scale their startup’s efforts with regards to marketing strategies/campaigns, product development, etc., which ultimately leads to higher startup success rates.

Here is an example of how to pin down a KPI you are tracking…

You created an email marketing course with a goal in mind: increase the number of customers who purchase through their free trial offer. Your KPI is therefore how many people upgrade from their free trials after watching this video series. If less than half do so within 30 days, then there must be something wrong with either the training or its placement on your website (or both).

Customer acquisition cost (CAC)

Customer acquisition cost (CAC) is the average amount of money spent by a startup to acquire one new customer. This includes things like advertising and marketing costs, salaries for sales reps, etc. Startups who track CAC can benchmark their startup against competitors’ pricing models as well as determine if there’s enough margin in their business model to continue growing.

For example:

You want your startup’s growth strategy to focus on paid ads targeting people who are interested in X topic/topic area because you know they’re more likely to buy from you than those just scrolling through Facebook posts or searching around Google looking for similar products/services.

To do this, however, requires that you also measure ad campaign effectiveness with CTR — click-through rate.

Average revenue per user (ARPU)

Average revenue per user (ARPU) is the average amount of money made by startup monthly or annually from each customer. This metric gives startups an idea of their startup’s potential for growth and also lets them see how they stack up against competitors in terms of pricing tiers/models.

For example:

You’ve noticed that your startup has a high ARPU — that’s great! What you’ll need to do next is figure out what makes this number so high compared to other companies who are doing really well on social media but have much lower ARPU numbers than yours do.

Compare CAC with industry benchmarks as well as competitor prices when determining which direction to take future marketing/campaigns because usually startup success is a direct result of startup marketing.

Customer lifetime value (LTV)

Customer lifetime value (LTV) is the startup KPI that takes ARPU and CAC into account to determine how much revenue or profit a startup can expect to generate from each of its customers. This number varies for every startup depending on their industry, business model, etc.

For example:

Your startup has an LTV/revenue per customer of $500 over the course of your average client’s lifetime with you — that’s great! But if you notice that some clients are staying longer than others before canceling their accounts, then it might be worth investigating why these people choose not to renew after all this time when they still seem quite satisfied with your product/service offering.

Try running surveys or polls asking clients about their experiences with your startup to see if anything stands out.

Monthly active users (MAU)

Monthly active users (MAU) is the startup KPI that represents how many people are using your product/service on a monthly basis. This number can fluctuate depending on startup company strategies and should be considered in relation to other startup metrics like MAU churn rate, average revenue per paying customer (ARPPC), etc. because it’s all part of an interconnected system where one change affects another.

For example:

Your startup has about 100k subscribers who visit your website every month but you don’t have any conversions from this audience — that’s not good! Try adding polls or surveys to see what kind of content they’re interested in so you can tailor future blog posts more towards their interests as well as offer them free trials/samples so they can see for themselves how helpful your startup is.

Customer churn rate (CCR)

Customer churn rate (CCR) is the startup KPI that represents how many customers are canceling their subscriptions in a given time frame.

For example:

Your startup has an average customer lifetime of 90 days and your CAC/LTV numbers indicate positive growth, but if you notice high rates of recent cancellations it might be worth looking into why these people aren’t sticking around for much longer when they’re clearly interested in your startup’s product offering — try running polls or surveys to get more information on what kind of content they like most as well as strategies for improvement.

You can then run A/B tests with this new data to determine which marketing campaign lead to better conversion ratios so you know where exactly(if anywhere) to invest startup resources for future growth.

Monthly recurring revenue (MRR)

Monthly recurring revenue (MRR) is the startup KPI that represents how much monthly profit your startup makes.

For example:

Your startup has an average ARPU of $500 and you calculate LTV at $1500 — that’s great! But if you notice high rates of recent cancellations it might be worth looking into why these people aren’t sticking around for much longer when they’re clearly interested in your startup’s product offering — try running polls or surveys to get more information on what kind of content they like most as well as strategies for improvement.

Revenue growth rate

Revenue growth rate is the startup KPI that represents how much revenue your startup makes over time.

For example:

Your startup has an average ARPU of $500 and you calculate LTV at $1500 — that’s great! But if you notice high rates of recent cancellations it might be worth looking into why these people aren’t sticking around for much longer when they’re clearly interested in your startup’s product offering — try running polls or surveys to get more information on what kind of content they like most as well as strategies for improvement.

Revenue churn rate (RCR)

Revenue churn rate (RCR) is the startup KPI that represents how much revenue your startup makes over time.

For example:

Your startup has an average ARPU of $500 and you calculate LTV at $1500 — that’s great! But if you notice high rates of recent cancellations it might be worth looking into why these people aren’t sticking around for much longer when they’re clearly interested in your startup’s product offering — try running polls or surveys to get more information on what kind of content they like most as well as strategies for improvement.

Let wrap it up

In order to grow a startup, it’s necessary to have data at your fingertips that can help you make strategic decisions. Roles like customer churn rate and monthly recurring revenue are startup KPIs that measure how well the startup is progressing towards its goals and objectives.

It’s important for startups to track these numbers in relation to one another so they know what areas need improvement. In this article, I’ve provided 8 startup KPI examples as well as an example of where each might be tracked on a spreadsheet or other tool. We hope this provides some clarity into how you can use startup key performance indicators (KPIs) more effectively.