Friday Q&A: What are the most important startup metrics?
Every Friday, we’re answering your questions about business, startups, customer success and more.
This week’s question is:
Note that these aren’t necessarily the best metrics for you. That will depend on your specific business, customers and growth model. But I think that for any B2B SaaS company, these are a good place to start:
Monthly Recurring Revenue: This is the key performance indicator that we’re focusing on in most quarters. With our model, we’re a lot more interested in recurring revenue than single transactions, since we want long-term customers. Knowing our MRR makes planning for the future a lot easier.
Monthly Churn: It’s impossible to get a “real” look at your revenue and growth without accounting for churn, whether it’s total number of customers churned, revenue churn or, as you grow larger and “total customers churned” becomes harder to make use of, percentage of customers churned. This tells you what you’re losing each month, and focusing on reducing churn can result in much bigger wins that many people think.
Monthly Unique Visitors: Since our blogs are the biggest drivers of our growth, we track blog traffic closely. As you grow you’ll segment this metric out into more granular metrics, but this is a good place to start. Increasing traffic is important, as even if your other numbers aren’t great yet, in absolute terms, more traffic almost always means more customers.
Visitor-To-Trial Conversion Rate: The second step in our funnel is turning website visitors into trial users. This metric tells us in very simple terms if we’re doing a good job at that. The higher your traffic, the bigger the impact you can make on your business by optimizing this metric.
Trial-To-Paid Conversion Rate: This metric tells us about the quality of our product and onboarding; how many trial users are staying on to become paying customers? It even tells us about the quality of our marketing; are we making promises and telling a story that actually matches what our product delivers? Trial-to-Paid conversions is a great catch-all “business health” metric.
The bigger you grow and the more time you spend on all of these things, the more you’ll learn which metrics actually matter for your business.
But I hope that this serves as a helpful starting point.
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I’d love for this new weekly segment to be successful, and provide a valuable repository of answers from our entire community for entrepreneurs everywhere.
To do that, I need your help.
Here’s what you can do to get involved:
- Ask questions. Post them in the comments of this post, or Tweet them to us at @Groove.
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