What are the Types of Metrics you need to track in a startup?

When running a startup, tracking metrics is crucial for success. Metrics give you the data you need to make informed decisions, monitor progress, and adjust your strategy as needed. In this blog post, we will explore some of the key metrics that startups need to track and what they mean.

1. MRR (Monthly Recurring Revenue): MRR is the amount of revenue that your company generates on a monthly basis from your recurring subscriptions. This metric is essential for monitoring your company's revenue growth over time.
2. ARR (Annual Recurring Revenue): ARR is the annualized version of MRR. This metric provides an estimate of the total revenue that your company will generate over the course of a year based on your current MRR.
3. ARPA (Average Revenue Per Account): ARPA is the average amount of revenue that your company generates per account or customer. This metric is useful for understanding the value of each of your customers and for identifying ways to increase revenue per customer.
4. Gross Profit: Gross profit is the revenue that your company generates minus the cost of goods sold. This metric is essential for understanding the profitability of your business.
5. TCV (Total Contract Value): TCV is the total value of all of your company's contracts or deals. This metric is useful for understanding the overall size of your company's sales pipeline.
6. ACV (Annual Contract Value): ACV is the annualized version of TCV. This metric provides an estimate of the total revenue that your company will generate over the course of a year based on your current TCV.
7. LTV (Customer Lifetime Value): LTV is the total amount of revenue that your company can expect to generate from a single customer over the course of their lifetime. This metric is essential for understanding the long-term value of your customers and for identifying ways to increase customer retention.
8. Deferred Revenue: Deferred revenue is the revenue that your company has received but has not yet recognized as earned. This metric is useful for understanding your company's cash flow and for identifying areas where your revenue recognition policies may need to be adjusted.
9. Billings: Billings are the total amount of revenue that your company has invoiced over a specific period of time. This metric is essential for understanding your company's cash flow and for identifying areas where your invoicing processes may need to be adjusted.
10. CAC (Customer Acquisition Cost): CAC is the total cost of acquiring a single customer. This metric is essential for understanding the cost of your sales and marketing efforts and for identifying ways to increase your company's profitability.
11. Concentration Risk: Concentration risk is the risk that a significant portion of your company's revenue comes from a small number of customers. This metric is useful for understanding your company's overall revenue diversification and for identifying areas where your sales efforts may need to be expanded.
12. DAU (Daily Active Users): DAU is the number of unique users who have used your company's product or service on a daily basis. This metric is essential for monitoring user engagement and for identifying areas where your product or service may need to be improved.
13. MAU (Monthly Active Users): MAU is the number of unique users who have used your company's product or service on a monthly basis. This metric is useful for understanding the overall size of your user base and for identifying areas where your user acquisition efforts may need to be improved.
14. Number of logins: The number of logins is the total number of times that users have logged into your company's product or service. This metric is useful for understanding user engagement and for identifying areas where your product or service may need to be improved.
15. Activation Rate: Activation rate is the percentage of users who have successfully activated or onboarded onto your company's
16. MoM Growth Rate (Month over Month Growth Rate): MoM Growth Rate measures the percentage increase or decrease in a metric from one month to the next. This metric is useful for tracking short-term growth trends and for identifying areas where your company is seeing rapid or slow growth.
17. CMGR (Compounded Monthly Growth Rate): CMGR measures the average monthly growth rate of a metric over a period of time. This metric is useful for tracking long-term growth trends and for identifying areas where your company is seeing steady or inconsistent growth.
18. Monthly Churn Rate: Monthly Churn Rate is the percentage of customers or users who cancel their subscription or stop using your product or service during a given month. This metric is essential for understanding the rate at which your company is losing customers or users and for identifying areas where your retention efforts may need to be improved.
19. Retention: Retention measures the percentage of customers or users who continue to use your product or service over time. This metric is essential for understanding the long-term value of your customers and for identifying ways to increase customer loyalty.
20. Gross Churn Rate: Gross Churn Rate is the percentage of customers or users who cancel their subscription or stop using your product or service over a given period of time. This metric is useful for understanding the overall rate at which your company is losing customers or users.
21. Net Churn: Net Churn is the difference between the number of customers or users who cancel their subscription or stop using your product or service and the number of new customers or users who sign up during a given period of time. This metric is useful for understanding the overall impact of customer or user churn on your company's growth.
22. Burn Rate: Burn Rate is the rate at which your company is spending its cash reserves. This metric is essential for understanding your company's cash flow and for identifying areas where expenses may need to be reduced to extend your runway.
23. TAM (Total Addressable Market): TAM is the total market opportunity for your company's product or service. This metric is useful for understanding the overall size of the market and for identifying areas where your sales and marketing efforts may need to be expanded.
24. MRR Projection (Monthly Recurring Revenue Projection): MRR Projection is an estimate of the amount of monthly recurring revenue that your company will generate in the future based on your current MRR and growth trends. This metric is useful for forecasting future revenue and for identifying areas where your company's revenue growth may need to be accelerated.
25. GMV (Gross Merchandise Value): GMV is a metric used to calculate the total value of merchandise sold through a platform, app or online marketplace, regardless of revenue earned. Essentially, it measures the total volume of goods and services sold through a platform or website.

• Example: One popular startup that uses GMV as a key metric is Alibaba Group Holding Limited, a Chinese multinational technology conglomerate that specializes in e-commerce, retail, and technology. Alibaba operates a range of online platforms, including Taobao, Tmall, and Alibaba.com, which collectively enable consumers and businesses to buy and sell goods and services online.

Tracking the right metrics is crucial for the success of any startup. By tracking key performance indicators (KPIs) such as MRR, ARR, ARPA, Gross Profit, TCV, ACV, LTV, Deferred Revenue, Billings, CAC, Concentration Risk, DAU, MAU, Number of logins, Activation Rate, MoM Growth Rate, CMGR, Monthly Churn Rate, Retention, Gross Churn Rate, Net Churn, Burn Rate, TAM, and MRR Projection, startups can gain valuable insights into their performance and make data-driven decisions that will drive growth and success.

For example, consider a startup that provides a software solution for small businesses. By tracking their MRR and Monthly Churn Rate, they identified a need to improve their retention efforts and reduce customer churn. They implemented several changes to their product and support services, resulting in a significant improvement in their retention rate and overall growth. Additionally, by tracking their CAC and Gross Profit, they identified areas where they could improve their marketing and pricing strategies, resulting in a reduction in customer acquisition costs and an increase in revenue.

In conclusion, startups that track the right metrics and use this data to inform their decisions will be better equipped to succeed in today's competitive market. By understanding and optimizing their performance across these KPIs, startups can achieve their growth targets, increase profitability, and build long-term success.