As a startup CEO, you’re constantly making decisions that shape your company’s future. To stay on track, you need to focus on the right metrics to give you insights into your startup’s performance and potential. Here are seven key metrics that can help you measure success and drive smart growth.
In this article, we cover the topic of metrics for measuring startup success.
Customer acquisition cost (CAC)
Customer Acquisition Cost (CAC) measures how much you spend to acquire a new customer. Keeping this cost low is crucial for growth. If you spend too much to bring in customers, it will be hard to scale your business sustainably. Tracking CAC helps you see how effective your sales and marketing efforts are.
Lifetime value of a customer (LTV)
Lifetime Value (LTV) tells you how much revenue each customer generates throughout their relationship with your company. The higher your LTV, the better, as it means you’re retaining customers for longer and getting more value from each one. It’s especially powerful when compared to CAC, as it shows whether acquiring customers is profitable in the long run.
Revenue growth
Revenue growth reflects how fast your startup is scaling. Fast growth shows that your product is resonating with the market and customers are willing to pay for it. It’s one of the clearest signs of success and a key metric that both investors and stakeholders will pay attention to.
Burn rate
Your burn rate shows how quickly you’re spending money, particularly if your startup isn’t profitable yet. This metric helps you keep an eye on cash flow and signals how much time you have before needing additional funding. Managing your burn rate well is crucial to staying financially healthy.
Runway
The runway is the amount of time your startup can operate with its current cash reserves. It’s closely tied to your burn rate—a longer runway gives you more flexibility to grow, pivot, or ride out challenges without immediately needing more investment. Keeping a healthy runway is key to navigating the ups and downs of early-stage business.
Churn rate
The churn rate tracks the percentage of customers who leave your product or service over time. If churn is high, even rapid customer acquisition won’t lead to sustainable growth. Reducing churn is crucial because it costs less to keep existing customers than to acquire new ones. Low churn is a sign of strong customer satisfaction and loyalty.
Net promoter score (NPS)
Net Promoter Score (NPS) is a customer satisfaction metric that measures the likelihood of customers recommending a startup’s product or service to others. It is calculated by asking customers, on a scale of 0 to 10, how likely they are to recommend the product. Customers are then grouped into three categories:
- Promoters (9–10): Loyal enthusiasts who will refer others.
- Passives (7–8): Satisfied but unenthusiastic customers.
- Detractors (0–6): Unhappy customers who can damage the brand.
As a CEO, focusing on these seven key metrics will help you stay aligned with your startup’s goals and make data-driven decisions. By keeping an eye on CAC, LTV, revenue growth, and more, you’ll be able to steer your company toward long-term success and make the most of your growth opportunities.
Our mission is to support startups in achieving success. Feel free to reach out with any inquiries, and visit our blog for additional tips. Tune in to our podcast to glean insights from successful startup CEOs navigating their ventures.