Industry Metrics and KPI's 101
Track, Analyze, Succeed: Uncover the Power of KPIs and Industry Metrics.
Building and scaling a business isn’t just about ideas—it’s about measuring what matters. In this post, I share what I’ve learned about identifying the metrics that drive success, aligning them with your goals, and using them to guide your decisions. Whether you’re an early-stage founder, running an established venture or a sidehustler, understanding your KPIs and industry metrics is essential to growing with purpose and clarity. Let’s dive into how to master this critical aspect of your business.
Understanding Your Industry, Its Metrics, and KPIs
Understanding Your Industry, Its Metrics, and KPIs
Key performance indicators (KPIs) are metrics that provide useful data for making decisions, determining the health (or lack of health) of a business, and assessing the direction it’s going so changes can be made before it’s too late. Without measuring key indicators of a business on a daily, weekly or monthly basis, you would be flying blind.
You may have confidence in your business, feel good about your team, get some traction in the market and have an aggressive roadmap, but still be measuring the wrong things or nothing at all. This creates risk for your business and, unfortunately, it tells investors and potential investors that you are not quite knowledgeable about how to manage a startup for growth, which is what investors want.
Not only do metrics allow you to understand, track and manage your business better, but they help you understand the cause and effect of why and how your company is growing and whether or not it’s heading in the right direction. It’s great to grow your company, but you need to know why you are growing, what factors are at play and how you can maximize those factors for greater growth over time.
You need to figure out how product quality or customer satisfaction is affecting your financial metric, such as your revenue growth rate. When you deliver a product or service that customers buy once or more, you are creating value for them. You need KPIs to track the linkage between the financial measurement and the value creation.
Your KPIs should be linked to your overall objective for what your company is trying to achieve. You need to be continuously evaluating the drivers of your business, adjusting your team’s activities and taking action to solve problems.
North Star Metric: Guiding Your Focus
Amidst the many KPIs your business tracks, identifying a North Star Metric is essential. This singular metric represents the core value your company delivers to customers and aligns your entire team’s efforts toward achieving that ultimate goal. It acts as a guiding light, ensuring every activity contributes to your overarching mission. A.k.a. the One Metric That Matter.
For instance, if your business is a subscription-based model, your North Star Metric might be “Monthly Active Subscribers.” By focusing on this metric, all other KPIs like customer churn rate, retention rate, and customer acquisition cost will serve to support it. The North Star Metric not only simplifies decision-making but also keeps your team aligned and laser-focused on what truly matters.
For example, customer churn rate is a KPI that tells you the percentage of customers lost during a set period of time. This includes customers who cancel subscriptions or did not make repeat purchases. This data provides insight that will help you make changes, either eliminating the reason why customers don’t buy a second time or adding more value to the offering. The cause of the problem (i.e. cancelled subscriptions or one-time-only purchases) can be determined in order to change and improve the effect.
Another example is knowing your Activation Rate—how many visitors are engaging with your app or website—and Active Users Rates—the “stickiness” of your product (how often people engage with your product). These KPIs provide insights on what specifically is working with your customers, going back to the cause-and-effect relationships. What is causing the customer satisfaction or dissatisfaction (effect)?
As the founder and CEO of a startup, you need to have your finger on the pulse of your business, but even more significant is your need to know precisely how fast your company is burning through money—the Burn Rate. It determines how much cash you need to operate and survive. So, KPIs are vital to planning, fundraising and, yes, surviving.
Different industries put a different emphasis on certain metrics. If you are a fintech startup, you are more likely focused on financial value creation. If you are in a consumer tech industry, you could focus on different KPIs, such as customer loyalty. You need to know what KPIs are most commonly used and valued in your industry, especially among investors in your sector.
In general, the number one thing that most investors are looking for in an early stage startup is the ability to accelerate and grow monthly revenues with a path to sustaining operations. Your full commitment to using and managing KPIs positions you to make a strong case with investors as to why they should invest in your company.
General KPIs for All Industries:
Revenue: The income generated from sale of goods or services.
Cost of Goods Sold (COGS): The direct costs attributable to the production of the goods sold in a company.
Gross Margin: The difference between revenue and cost of goods sold divided by revenue.
Customer Acquisition Cost (CAC): the sum of all sales and marketing spending divided by the number of new customers in a given time period.
Burn Rate: The rate at which you are spending money.
Churn Rate: The percentage of service subscribers who discontinue their subscriptions within a period of time.
Media and Entertainment:
Rankings: How you rank compared to competitors, as judged by the audience.
Impressions and Clicks: The ratio at which impressions lead to clicks on your site.
Likes, Shares, and Comments: The amount of likes, shares, and comments that occur within a certain period of time.
Brand Mentions: The amount of times your brand is mentioned in a certain period of time.
Audience Size: The size of your audience.
Monthly Audience Growth Rate: The percent at which your audience grows per month.
Audience Engagement: The level at which your audience is engaged with your material.
Audience Conversion Rate (ACR): The percentage of your audience that turns into a paying customer.
Monthly Press mentions: The amount of times your company is mentioned in the press per month.
Education:
Daily Active Users: The number of users who access your app or web address in a day.
Monthly Active Users (MAU): Number of people who use your platform monthly.
Course Churn Rate: The percent of users who discontinue their course participation.
Average Course Attendance: Average number of user course attendance.
Profit Per Customer (PPC): The percentage of profit made from each customer.
Customer Satisfaction: Customer complaints/satisfaction divided by the total number of customers.
Customer Return Rate (CRR): The percentage of customers who come purchase again.
Labor Costs Per Customer (LCPC): The total cost of required labor per customer.
Labor Churn Rate (LCR): The overall turnover in an organization’s staff as existing employees leave and new ones are hired.
Monthly User Growth Rate: The percent at which your users grow per month.
Audience Engagement: The level at which your audience is engaged with your material.
Healthcare and Medtech:
Customer Lifetime Value (LTV): How much revenue they can expect one customer to generate over the course of the business relationship.
Customer Return Rate (CRR): The percentage of customers who come purchase again.
Total Users Serviced: Total amount of individuals serviced.
Clinical Performance: Clinical performance ratios compared to competitors, past performance.
Average Contract Value: The average value of a patient contract.
Labor Costs Per Customer (LCPC): The total cost of required labor per patient.
Labor Churn Rate (LCR): The overall turnover in an organization’s staff as existing employees leave and new ones are hired.
Profit Per Customer (PPC): The percentage of profit made from each patient.
Customer Satisfaction: Customer complaints/satisfaction divided by the total number of customers.
Business to Business (B2B):
Marketing Qualified Lead (MQL): The amount of MQLs that you receive in a certain period of time.
Sales Qualified Lead (SQL): The amount of SQLs that you receive in a certain period of time.
Customer Lifetime Value (LTV): How much revenue they can expect one customer to generate over the course of the business relationship.
Average Contract Value: The average value of a client contract.
Quoted Customer to Close ratio: The percentage of quoted customers who purchased your offering.
Monthly PR mentions: The amount of times your company is mentioned in the press per month.
Cost Per Lead (CPL): The cost required to attain a sales lead.
Bounce Rate: Rate at which a visitor leaves your site after looking at only one page.
Finance and Fintech:
Daily Active Users: The number of users who access your app or web address in a day.
Monthly Active Users (MAU): Number of people who use your platform monthly.
Average Time to First Transaction: How long it takes users to perform their first transaction.
User Sign up: How many users sign up in a certain period of time.
Time on Page: The length of time a user spends on your web page.
App Open Rate (AOR): Percentage of sessions generated by app users.
Churn Rate: The percent of users that you lose over a certain period of time.
Retention Rate: How often users return to your app within each quarter.
Total Transactions: The total number of transactions on the platform.
Community and Lifestyle:
Rankings: How you rank compared to competitors, as judged by the audience.
Impressions and Clicks: The ratio at which impressions lead to clicks on your site.
Likes, Shares, and Comments: The amount of likes, shares, and comments that occur within a certain period of time.
Brand Mentions: The amount of times your brand is mentioned in a certain period of time.
Audience Size: The size of your audience.
Monthly Audience Growth Rate: The percent at which your audience grows per month.
Audience Engagement: The level at which your audience is engaged with your material.
Audience Conversion Rate (ACR): The percentage of your audience that turns into a paying customer.
Business to Consumer (B2C):
Marketing Qualified Lead (MQL): The amount of MQLs that you receive in a certain period of time.
Sales Qualified Lead (SQL): The amount of SQLs that you receive in a certain period of time.
Customer Lifetime Value (LTV): How much revenue they can expect one customer to generate over the course of the business relationship.
Website Traffic to Web Lead: The Website Traffic Lead Ratio tells you how many of your website visitors convert to leads.
Cost Per Lead (CPL): The cost required to attain a sales lead.
Email click-through rate (CTR): Calculated by the number of subscribers that have clicked on at least one link in your email marketing campaign.
Time on Page: The length of time a user spends on your web page.
Crawl Rate: The number of requests per second Googlebot makes to your site when it is crawling it.
Bounce Rate: Rate at which a visitor leaves your site after looking at only one page.
Average Contract Value: The average value of a client contract.
Sales Team Response Time: Amount of time it takes for sales team to respond to client.
Quoted Customer to Close ratio: The percentage of quoted customers who purchased your offering.
Monthly Press mentions: The amount of times your company is mentioned in the press per month.
Blockchain and Crypto:
Active Users: The number of users who access your app or web address in a certain period of time.
Total Transactions: The total number of transactions on the platform.
Value of Transactions: The total value of transactions on the platform.
Balances in Smart Contracts: Total balance in Smart Contract value.
Total Output Value (TOV): The total value of all transaction outputs per day.
Transactions to/from Contracts: The number of transactions from contracts.
Wallet Users: The total number of wallets created on the platform.
Wallets Value: Total value of wallets on the platform.
Unique Addresses: The total number of unique addresses used on the platform.
Food and Beverage:
Average Daily Customers: The average number of customers that visit per day.
Average Monthly Revenue: The amount of money you generate on average in one month.
Average Revenue Per Customer (ARPC): The total revenue divided by the number of customers.
Labor Costs Per Customer (LCPC): The total cost of required labor per customer.
Labor Churn Rate (LCR): The overall turnover in an organization’s staff as existing employees leave and new ones are hired.
Profit Per Customer (PPC): The percentage of profit made from each customer.
Customer Satisfaction: Customer complaints/satisfaction divided by the total number of customers.
Customer Return Rate (CRR): The percentage of customers who come purchase again.
Food Cost Percentage: Food cost over food sales.
Booking Forecast: Prediction of MRR based on future bookings.
Monthly Press Mentions: The amount of press mentions you receive monthly.
Software and Technology:
Monthly Recurring Revenue (MRR): How much money you are acquiring from customers per month.
Contracted/Committed Recurring Revenue (CMRR): a projection of MRR in a future period, modified to take into account any guaranteed revenue expansion or anticipated churn over the period.
Churn Rate: the percentage of service subscribers who discontinue their subscriptions within a period of time.
Revenue Churn Rate (RCR): is the percentage of revenue you have lost from existing customers in a period.
Annual Contract Value (ACV): the total contract value of a customer normalized into a yearly account.
Total Contract Value (TCV): The total contract value of a customer including recurring license fees and all non-recurring fees.
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