How do entrepreneurs measure the success of their startups? Which metrics tell these company founders that their long term vision is actually paying out? The startup success measurement yardsticks we’ve listed below are from the mouths of selected entrepreneurs worldwide – read on.
1. Goal Evaluation
What were your primary goals for different areas of your business? How many months has it been since you started the company and how close are you to achieving those goals? Use this yardstick to evaluate various business goals to measure your startup’s success at any point in your business curve.
2. Multiple Metrics
Meet with your partners and investors and set multiple sets of metrics based on the stage where your company’s at, and your role and function in the company. There’s no one-size-fits-all approach when it comes to success metrics – you have to set them and track your company’s objectives every month or quarter.
3. Customer Acquisition
Run a customer acquisition analysis to see how many customers you’re acquiring every month. Is the growth steady? How many new customers do you have via organic SEO, affiliate deals, SEM or customer referral program? Track lead generation sources and measure viral adoption to evaluate success of customer acquisition strategies.
4. Repeat Business
How many of your customers are coming back for more? How are your loyalty programs working? Is there a steady increase in the number of customers who return to purchase at your site? Set goals to achieve a certain percentage of business from repeat customers, and work towards increasing this number. This is a sure metric to measure startup success.
5. Customer Satisfaction
Get a measure of customer satisfaction using surveys and feedback. Use an analytics software to clearly measure customer satisfaction against various metrics. Now evaluate the results based on your goals for customer satisfaction. Do you measure positively in this area?
6. Customer Acquisition Cost
How much does it cost to acquire customers through each channel in your customer acquisition funnel? This evaluation will help you understand how scalable your business is. The more scalable it is, the better your chances of success, so work on making your business 100% scalable.
7. Customer Churn
Measure your customer churn based on the reasons for their dropping out. You can use a poll or survey to find out the reason for the churn. Are customers not happy with your product or is your product priced to high? If your customer churn is very high, then you’re doing something wrong. Fix it.
8. Customer Lifetime Value
How many customers cancel every month? If 5% of your customers cancel each month, you can expect every customer of yours to be worth 5 times your subscription rate. Use the customer lifetime value to evaluate your success.
9. Campaign Success
Measure the success of your marketing campaigns based on the conversion rates received from each campaign. Which campaign was more successful? If you ran with similar campaigns, what level of conversion success can you achieve within a given period? You can use this metric to measure your startup’s success as well.
10. Conversion Funnel
Observe your basic conversion funnel, right from page views, to subscriptions to actual paid conversion. Is there a steady growth in the conversion funnel? What percentage of visitors are signing up and eventually buying at your store?
11. Product Stability
Set a goal for product stability, based on industry standards. Regularly measure against this goal, and focus your resources on achieving 100% product stability. This metric helps drive startup success. The more stable your product, the greater your success.
12. Organizational Stability
Stable finances are a sure fire way to tell if a startup is a success or not. Let’s assume you want to invest in new employees, or take on new costs towards equipment or processes. Where does the money come from? If you’re forced to borrow at high rates each time, you’re not a success.
13. Revenue Metrics
Bucket your revenue into different kinds and measure revenue against each bucket. For example, 30% of your revenue might come from banner Ads and 20% might come from direct sales. Evaluate costs against revenue and see how things measure up.
14. Revenue Projections
When you create your monthly revenue projection, note if there’s a steady rise in projection from month to month. There will be lean months but if overall there is a steady rise in cashflow, your startup is a success.
Founding a company and helping it to succeed is a bit of a gamble. Even if other negatives are there, if you’re making profits, it’s a clear indication that your startup is not a failure. Do a profit-loss assessment for the year; the more black you’re in, the more successful you are.
Gagan is a die-hard advocate of modern conversion rate optimization techniques to up online conversion rates. Apart from contributing articles to various blogs, he regularly speaks on this subject.
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