In the startup world and in business in general, if you’re not tracking, you’re not learning. If you don’t have data to work with, it’s hard to know how to make the right moves or adjustments in an effort to boost growth. Without data, you can’t understand why your business is or isn’t growing, you can’t identify opportunities, and you can’t recognize what needs to be fixed.
The problem is, data and analytics is a complex area. How do you decide what you should be tracking? It’s not always easy to know, especially if you’re someone who is relatively new to the startup and entrepreneurship game.
In an effort to provide some clarity, we recently reached out to 13 startup experts and asked them for insight on the matter. We asked this select group of stellar startup founders and growth influencers to answer the following question:
What is the most important metric every startup founder needs to be paying attention to in order to build and grow a sustainable business?
Here’s what they had to say:
“Revenue. Within any analytics tool you can track your conversion rates and revenue. This metric is important for any company, but startups tend to ignore revenue, when eventually they need to start making it.” — Neil Patel, Entrepreneur, NeilPatel.com
“The most important metric is NPS (net promoter score). Your NPS is the heartbeat of your company’s present and future. A strong NPS score fosters low churn and strong referral network. All other growth strategies are amplified by a high NPS.” — Chad Halvorson, CEO / Founder, When I Work
3. Authentic conversations
“This is going to sound unusual – and surely isn’t conventional wisdom – but I think the most important metric to track for a STARTUP is conversations with customers. The feedback and insights you can get from talking to your customers should be incentive enough to track this. But, we’ve found the more we talk with our customers whether it’s by email, text message, phone call, whatever – the more we get people to complete their sign ups and convert into loyal, paying customers.” — Ashli Norton, Co-Founder, Autosend
4. Profit first
“The most important metric every startup founder should be tracking is profit. Outside of that, it depends on what stage you’re in. (Just because Startup Founder X is measuring her success based on invite rates doesn’t mean you should.) Work backwards from profit and identify the 3-5 metrics that will give you the most accurate pulse. There are no universal rules / shortcuts.” — Heather Carson, Co-Founder & President, Onboardly
5. Customer acquisition cost is # 1
“For SaaS: CAC, LTV, MRR/ARR, Churn. For e-commerce: same as above sans MRR/ARR.” — Ken Kamada, CFO, DoubleDutch
6. User growth second, revenue first
“Revenue and profits are the most obvious answer. If you’re venture backed/have the liberty not to have to care about that immediately, user growth would be 2nd, as that eventually (maybe) can be turned into revenue.” — Ross Hudgens, Founder, Siege Media
7. No magic metric
“There is no one “magic metric”. Every business has a conversion funnel, regardless of their model. Therefore, in order to grow, every business should first identify the weakest point in their funnel, and then optimize it – from acquisition right through to referral.” — Jason Amunwa, Product Director, Digital Telepathy
“Retention! For the sake of your growth and the happiness of your investors, nothing speaks to your company’s value better than high customer retention.” — Ryan Buckley, Co-founder, Scripted
9. Love and loyalty
“It’s impossible to grow a business with a leaky bucket…i.e. a product that people don’t like or use, which is why every startup should have a way to measure this. Some companies measure this with NPS, engagement, or churn. When users love your product, they use you repeatedly and refer their friends/colleagues, both critical for growth.” — Matt Faustman, CEO, UpCounsel
“I’m not sure if there’s a metric for it but their time. Anything you can automate, you should get off your plate immediately. Your time should only be spent on things that only you can do and do best.” — Max Altschuler, CEO, Sales Hacker Inc
11. CCA, Revenue, LTV
“I don’t think there is one – I think there are several: (1). CCA – without getting this right you are not viable; (2). Revenue / margins / LTV – as above; (3). Member satisfaction – validation product market fit.” — Anna Rakoczy, CEO, Homemade Cooking
“In my case the most important metric is the external usage of the platform we’re building. Specifically, how many people are using our platform outside of our direct sphere of influence? Who are they? How did they find it? How can we replicate that?” — Robin Hawkes, Founder, ViziCities
13. Engagement, then MRR
Early on it’s all about engagement but at our current stage the most important metric is MRR growth rate. By itself it’s really useful but it’s more useful when broken down by it’s constituent parts: New Biz MRR; Churned MRR; Contraction MRR; Expansion MRR; Reactivation MRR.” — Paul Joyce, CEO, Geckoboard
Based on the answers from the experts we talked to, here’s the main takeaway:
There really isn’t necessarily one clear metric that stands above all others. At the end of the day, it really comes down to your business. It’s subjective. Things like profit and revenue are obviously extremely important, but you can’t have profit without happy customers who engage with your product and are willing to tell other people about it. As a startup founder, the best thing you can do is think about your goals. From there, work backwards to determine what needs to happen in order to meet those goals, how you’re going to get there, and what numbers you can pay attention to along the way to track progress.
What do you think is the most important metric every startup founder should be tracking? Leave your comment for us below.