World Class Performance Metrics - Tech Start-Up

What world-class metrics might be helpful to a new technology start-up company? Many metrics could be used here, but what might be most important?

Customer Focus

1. Customer Acquisition Cost (CAC):

• Measures the cost of acquiring a new customer, including marketing and sales expenses.
• Formula: CAC = Total Sales and Marketing Expenses / Number of New Customers Acquired
• Also knowing the demographics of acquired customers might help to focus marketing activities or even cause a pivot in focus.

2. Churn Rate:

• The percentage of customers who stop using the product or service over a given period.
• Formula: Churn Rate = (Number of Customers Lost during a Period /Number of Customers at the Start of the Period) ?~ 100

3. Net Promoter Score (NPS):

• Measures customer satisfaction and loyalty by asking how likely customers are to recommend the product to others.
• Formula: NPS = % Promoters - % Detractors

Financial Performance

1. Monthly Recurring Revenue (MRR):

• The predictable and recurring revenue generated by subscriptions or ongoing

contracts.

• Formula: MRR = Sum of Monthly Subscription Revenue

2. Burn Rate:

• The rate at which a startup spends its capital before generating positive cash flow.
• Formula: Burn Rate = Cash Spent per Month

3. Runway:

• The amount of time a startup can operate before it runs out of cash.
• Formula: Runway = Cash Reserves / Burn Rate

4. Gross Margin:

• Indicates the percentage of revenue that exceeds the cost of goods sold (COGS).
• Formula: Gross Margin = (Revenue - COGS) / Revenue ?~ 100

5. Operating Cash Flow

• Cash generated from the core business operations.
• Formula: OCF = Net Income + Non-Cash Expenses (e.g., depreciation,

amortization) + Changes in Working Capital

Product

1. Active Users:

• Tracks the number of unique users interacting with the product within a specific time frame (daily, weekly, monthly).
• Metrics: Daily Active Users (DAU), Weekly Active Users (WAU) Monthly Active Users (MAU)

2. User Retention Rate:

• Measures the percentage of users who continue to use the product over time.
• Formula: Retention Rate = (Number of Users at End of Period / Number of Users at the Start of Period) ?~ 100

3. Engagement Metrics:

• Measures how users interact with the product (e.g., time spent, feature usage, frequency of use).
• Examples: Average Session Duration, Feature Usage Rate

Growth

1. User Acquisition Growth:

• Tracks the rate at which new users sign up for the product.
• Formula: User Acquisition Growth Rate = (New Users This Period - New Users Last Period) / New Users Last Period ?~ 100

2. Revenue Growth Rate:

• Measures the rate at which the company's revenue is increasing.
• Formula: Revenue Growth Rate = (Revenue This Period - Revenue Last Period) / Revenue Last Period ?~ 100

Operational

1. Customer Support Metrics:

• Measure the effectiveness and efficiency of customer support.
• Examples: Average Response Time, Resolution Time, Customer Satisfaction Score (CSAT)

2. Development Velocity:

• Tracks the speed at which new features or updates are developed and deployed.
• Examples: Number of Releases per Month, Average Time to Market

3. Product Quality Metrics:

• Measures the stability and reliability of the product.
• Examples: Customer callbacks, Bug Count, Uptime Percentage, Mean Time Between Failures (MTBF)

Employee Engagement and Development

1. Employee Engagement Score:

• Definition: Measures the level of employee engagement and commitment to the organization.
• Methods: Employee engagement surveys, pulse surveys, and ENPS (Employee Net Promoter Score).

2. Learning and Development (L&D) Spend per Employee:

• Definition: The average amount spent on training and development per employee.
• Formula: L&D Spend per Employee = Total L&D Expenditure / Total Number of Employees

3. Employee Retention Rate:

• Definition: The percentage of employees who remain with the company over a

specified period.

• Formula: Employee Retention Rate = (Number of Employees Who Stayed / Total Number of Employees) ?~ 100

4. Turnover Rate:

• Definition: The percentage of employees who leave the company within a given period.
• Formula: Turnover Rate = (Number of Employees Who Left / Total Number of Employees) ?~ 100

5. Skills Analysis:

• Definition: Measures the difference between employees' skills and skills needed to meet organizational goals.
• Methods: Skill Matrix, skill assessments, competency evaluations, and performance reviews.

6. Certification and Qualification Rate:

• Definition: The percentage of employees who earn certifications or qualifications through development programs.
• Formula: Certification Rate = (Number of Employees Certified / Total Number of Employees) ?~ 100

Project performance

1. Timeliness: On-Time Delivery:

• Definition: The percentage of projects or milestones completed on or before the deadline.
• Formula: On-Time Delivery Rate = (Number of On-Time Deliverables /Total Number of Deliverables) ?~ 100

2. Cost Variance (CV):

• Definition: Measures the difference between the budgeted cost and the project's actual cost.
• Formula: CV = Earned Value (EV) - Actual Cost (AC)

3. Quality: Defect Density:

• Definition: The number of defects identified in a project per unit size (e.g., lines of code, number of requirements).
• Formula: Defect Density = Number of Defects / Size of Project

4. Customer Satisfaction:

• Definition: Measures the satisfaction of stakeholders or customers with the project outcomes.
• Methods: Surveys, Net Promoter Score (NPS), and feedback forms.

5. Rework Percentage:

• Definition: The amount of work that needs to be redone due to errors or defects.
• Formula: Rework Percentage = (Hours Spent on Rework / Total Project Hours) ?~ 100

6. Scope Change Requests:

• Definition: The number and impact of changes to the project scope.
• Methods: Track the number of change requests and assess their impact on project performance.

7. Project Success Rate:

• Definition: The percentage of projects that meet their objectives and deliver the expected outcomes.
• Formula: Project Success Rate = (Number of Successful Projects /

Total Number of Projects) ?~ 100

8. Innovation Rate:

• Definition: Measures the proportion of projects introducing new technologies or innovative solutions.
• Formula: Innovation Rate = (Number of Innovative Projects / Total Number of Projects) ?~ 100

9. Feature Adoption Rate:

• Definition: Measures how quickly and widely new features or products developed in the project are adopted by users.
• Methods: Track usage metrics and user feedback post-launch.

Please let me know your thoughts. Is this list useful? Do you have important metrics for your organization that differ from the above?