6 Important Business Metrics to Steer Your Startup Away from Trouble

The successful startup stories have always been attributed to various factors. Good timing, killer product, successful marketing campaigns, and so on. Each of these mentions can make a profound impact on the future of your business. However, the only way to eliminate the randomness and know you are treading in the right direction is to track the key metrics, see how your efforts envelop and quickly react to the feedback.

Here, we will take a look at some of the most important business metrics you will need to keep an eye on to grow your startup through its infancy.

Website traffic

Website traffic is an indicator of how well your marketing strategies are performing on different channels. Generally speaking, the more traffic you manage to generate, the higher are the chances of making a sale. However, strong traffic doesn’t always manifest in strong sales. That is why you should keep a close eye on the bounce rate – an indicator that tells you how many visitors have left immediately after landing on your website.

Cost of Acquisition

Any business that aspires to be successful needs to find a way to persuade a substantial pool of people to buy its products (customer acquisition). The cost of acquisition describes how much money you have invested in attracting each new customer and can tell you a lot of useful things about the efficiency of your marketing channels. Keep in mind, though, to subtract the hidden costs like salaries of marketing team before dividing your marketing investments with the number of new customers.

Customer loyalty

According to recent research, Australian businesses lose approximately $720 per negative customer experience, with only 56% of unhappy customers reporting the problem to the seller. Any professional analyst or business coach from Sydney would tell you to take these numbers very seriously and conduct frequent surveys and purchase analyses to determine are there any reason for dissatisfaction amongst your customer pool and how you can improve customer loyalty.

High-value customers

Closing the topic of customer involvement, amongst the pool of people who purchase your product are the so-called high-value customers – the persons who don’t only make repeat purchases, but are also more likely to recommend your products or services. Successful identification and retention of such customers may determine the survival of your business. Some of the metrics you can use for this purpose are purchase frequency, average order value, and price sensitivity.

Gross margin

One of the simplest indicators of your current performance and the efficiency of your business operations, gross margin indicates how much money you are earning from each sales dollar. The easiest way to get this number is to determine the company’s overall revenue minus the cost of the sold goods and divide it by the sales revenue expressed in percentage. A gross margin of 20% indicates that each sales dollar you make produces a $0.20 that can be used to cover operating costs.

Expense by category

Honestly, tracking expenses does seem like an obvious mention, but it is important to underline that this metric produces results only as long as you track your expenditures by category. Paying your attention only to large expenses like raw supplies or business assets could be a fatal mistake. Smaller purchases like food supplies and bills can pose a serious threat to your budget as well. Do your best to minimize these leaks with each new piece of information.

These six metrics should help you easily determine the direction in which your startup is going and quickly course-correct in something goes awry. There are a lot of startups that managed to catch lightning in the bottle. However, the majority of success stories were written with hard work and close observation.