Startups, even more than established businesses, have to analyze their overall performance and the effectiveness of their online efforts. Tracking valuable metrics and KPIs – key performance indicators – will show you how well Grow your startup is performing on the market. After all, the success of your startup depends on its ability to capture the attention of the audience and engaging them enough to make a purchase.
However, which metrics are the most important? Basically, you will need to concentrate on metrics that bring value to your business the most and on the metrics that help your business grow.
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Measure your gross margin
Gross margin is crucial for growing businesses. It is an indicator of how much your startup earns from each sales dollar. If high, you bask in profits, allowing you to cover expenses and consider additional investments for growing your business.
To calculate it, you will need to identify your startup overall sales revenue, subtracting the costs of goods which have been sold in the process, and ultimately dividing it with the total sales revenue expressed in percentage. Or, you can hire a business coach for a more efficient and accurate calculation. What’s more, gross margin is often an indicator of the overall performance of your startup and the efficiency of your business operations.
High-value clients are the customers that keep coming back and purchasing your products. Sometimes, they advocate your products or help you get more customers through referrals. In most businesses, retaining clients determine the future success of your startup.
Tracking, paying attention to, measuring and nurturing them is important, as they give you continuous business over the period of time. They may also be inclined to provide you with testimonials, which you can then use to persuade new clients. Also, it is simpler to upsell to this type of customers. This important metric can let you grow your business in a stable way.
Customer lifetime value
On the other hand, customer lifetime value is about calculating how much each client is worth to your business. Simply put, this is a value that a client will contribute to your startup throughout the entire time they work with you as an active customer.
To calculate this value, you will need to use either the historical data or a predictive analysis that considers prior transactions history as well as behavioral indicators. For instance, if a customer signs up for a twelve-month contract at $4,000 per month, and stays only for this one year, their lifetime value is 12 times $4,000, or $48,000 in total.
Website traffic per month
When your startup reputation is in question, there is no better indicator for it than the traffic on your site. The more people hear about your startup, the more likely will they check out your website pages.
- For measuring – use a free marketing tool like Google Analytics to track your monthly website traffic as well as traffic sources, to know how people find your website.
- For improving – start with increasing your marketing budget. There are also free marketing tactics, like sharing valuable advice on social media channels, enhancing your SEO, getting free press coverage, etc.
In the end, it doesn’t matter how you decide to measure your metrics, just as long as you are taking the time to measure them at all. Yes, it takes a bit of effort, but the insights you gain can help you expand your business. What is measurable, becomes manageable.