How do you know if your startup & scaleup growth is going the way you want? You need objective data to tell you whether or not your business is achieving its aims, and what you need to do to keep growing & scaling successfully. Here are the five essential metrics you need to track.
Today’s technology makes it easier than ever to track these metrics ( we call them ‘e-metrics’) and do it yourself in-house without hiring an analyst. Google Analytics offers a robust array of metrics and is free to use. There are also paid software programs including SaaS-applications you can use that automate calculating the data you need.
Return on Revenue (ROR)
The revenue return rate is how much profit your company is making after expenses are subtracted. Take your total income and subtract your operating expenses. The calculation must include day-to-day expenses, as well as expenses that aren’t as easily seen (such as rent and office supplies) and non-cash factors like inflation or depreciation of properties.
The run rate is a calculation of future performance based on present performance. If you have two years of data, calculate a monthly average. Then, if you’re looking at the next year ahead, multiply this by 12. Use as large a sample of past data as possible.
Average Customer Spend (ACS)
Your average customer spend tells you how much each customer buys from you. It’s calculated by taking your total revenue and dividing it by the number of current customers you have. This metric gives you an indication of how your company is performing.
Customer Acquisition Cost (CAC)
This metric is the cost of convincing a potential customer to buy your product or service or an existing customer to buy from you again. It tells you how much your sales and marketing efforts are paying off, and what resources you need to convert leads into customers. You can use this to predict your future revenues and Lean financing needs as you grow and scale.
Customer Retention Rate (CRR)
The customer retention rate tells you what percentage of your customers stay with you and buy again. It costs much more to gain new customers than to keep existing ones. If your rate of retention is low, your business is losing money. Low customer retention means you need to step up your efforts to engage and offer continuing value to your audience as part of the activities you carry out supporting the Customer-Life-Cycle (CLC).
Return on Advertising Spending (RAS)
This metric looks specifically at the cost of advertising and the amount of revenue it’s earning you. It tells you whether your advertising spending is paying off or not. If it’s not, you need to consider more effective or less expensive methods.
Metrics are critical to the new performance measurement systems (see ‘systems’ in your new scaleup organizational profile) you have to implement as part of your new growing organization if you want to climb over ‘The 2nd wall’ successfully. They help you assess your progress, but if you really want to see growth, you should set goals and timeframes for achieving them. You can then make changes and tweak if you’re not seeing the results you want as part of your Lean scaleup plan.
Do you want to know how to grow and scale your business and reach your goals? Then read ‘De scale-up blueprint’ on ‘systems’ and your scaleup marketing strategy. And bookmark this category of blogs on this site for more practical tips..