When starting your own business or growing your own startup KPIs tracking is one of the most important tools you can use to keep your growth on track and measure the viability of your business. We’ll walk you through the traditional and news ways of doing it.
Traditionally, the CAC:LTV Ratio is the most used KPI. This important KPI measures the sustainability of your company. This ratio can be broken down into two metrics:
CAC: Client Acquisition Cost
In a nutshell, this metric indicates how much money your company spends to acquire a new single customer (through marketing, advertising, sales, including salaries and overhead).
Essentially, the lowest the CAC, the better, so a high CAC can mean flaws in your sales process, and a growing CAC can be a sign of trouble (as your CAC is expected to reduce with time as you build your brand), but it depends on the situation: it’s not a problem if you’ve introduced a new product or service with much higher margins. Essentially, following your CAC can help you optimize your return on investment.
- LTV: Customer Lifetime Value
This metric measures how long a customer or user remains a client, on average, determining how much business value will derive from each customer.
Combining these two metrics into the CAC:LTV ratio, you get an indicator of the sustainability of a company. For a business to be successful, it must be able to drive more income from its customers, than the money it invests to bring them onboard, and to actually deliver the product/service the customer is receiving.
Although the CAC:LTV ratio has been traditionally used by investors and venture capitalists as a measure of growth and viability, there’s a new more viable KPI that was introduced by Social Capital and is used by Venture City and also by our own team in Lisbon Challenge by Beta-i – the Quick Ratio.
The Quick Ratio
The Quick Ratio is a shortcut metric to define where the product stands in terms of growth. It combines growth, retention and churn into one number that describes how efficiently your product is growing.
Essentially it’s the ratio between the new and resurrected clients over the clients lost in that month. Simply, if a Quick Ratio is >1 the number of users is growing and if it is <1 the number of users is declining.
It’s important to always see the number of lost clients in relation to the acquisition and retention of clients because it can tell you important information to base your next steps on. A company with a high retention rate doesn’t need to make a big effort in sales to keep growing steadily (as opposed to a company with a lower retention rate that would need a bigger client acquisition to keep growing at the same rate).
provided by The Venture City
A lower retention rate means you need to put efforts into bettering your product, and a low acquisition rate might mean you need to rethink your marketing strategy.
The only way to have a high ratio is to keep both acquisition and retention high – that means your product has a healthy life.
The advantage of using the quick ratio is that you can apply it for your product even when you don’t have paying customers yet, or apply it to several parts of the business in order to understand its challenges.
As Eduardo Sette Camara, Lisbon Challenge by Beta-i’s Head of Acceleration put it:
In a gross simplification, sustainable revenue and growth is the end result of capturing value through a great product/service delivery. But if you want to go to the core of what drives that growth, slice up the problem and variables, and really understand what sticks, applying the quick ratio calculation to more and more granular information can deliver those insights. It’s about trying to understand cause and effect.
This is why most VCs are looking into this metric as a way of evaluating the companies they want to invest in – and so should you.
Launching a startup isn’t just about developing a website or an app and taking it online. There are a lot of procedures and operational processes to take care of, in order to be able to scale and succeed.
There are many tools and services you can use, not only to help minimize the costs, but also to save time, optimize processes, and make the operation smart and smooth. From project management to data and analytics, for every crucial element of running and growing a startup, there’s a tool.
So, we have curated this list of the most useful tools available. Since one of the concerns of every startup is to keep the costs at a minimum, all the tools and services listed are free to start. Using these tools and services can help startups grow seamless for years.
Google Marketing Platform
Google Marketing Platform consolidates a set of tools for better collaboration, data sharing and analytics. It consists of Analytics, Data Studio, Tag Manager and Optimize.
Google Analytics alone is a winner, but when integrated with Tag Manager, Data Studio and Optimize it turns into a monster of seamless data and analytics processes:
- Set Analytics to collect data;
- Use Data Studio to build dashboards to analyze and process that data;
- Use Tag Manager to manage all your tags without editing code;
- Take advantage of Optimize to engage your visitors, create personalized experiences and test what works best.
Killer feature: The seamless integration between the four features makes it easy to collect and visualize visits and traffic data, and to create custom funnels and metrics. Analyze your audience’s behavior to understand their flow and segment them to create a target and target-specific ads.
Every market effort your startups makes, from emails and newsletters to blog posts and social media, should be feeding leads to your marketing funnel – and each of those should be helping you grow your customer base. That’s where Hubspot enters.
HubSpot is a software platform that helps you generate leads, close deals, manage your pipeline, and delight your customers, offering a suite of products for customer relationship management (CRM), content management (CMS), marketing, sales, and customer service.
Killer feature: The possibility to keep track of everything from your contacts and prospects, to blog posts, to email and social media campaigns, to leads and deals, on the same platform.
Trello is a team collaboration tool that lets you organize anything and everything to keep your projects on track.
Trello allows you to capture different “cards” and organize them into lists and boards You can share entire boards with your team and assign specific cards to teammates. Instead of sending out emails to give updates, everyone can add comments directly to a card, meaning that communication stays tied to a task and it’s not missed by team members.
Killer feature: Trello can be adapted to fit your workflow or your team. Use it to plan complex projects or to plan what you’re eating for dinner – its beauty is in its flexibility.
Slack is a platform for team communication: everything in one place, instantly searchable, available wherever you go. Offering instant messaging, document sharing and knowledge search for modern teams, Slack is replacing email and IM and everything between.
Killer Feature: Slack offers a simple way to talk in groups or in private, but the integrations are what makes it indispensable. Drag in a file, share a Google Drive document, YouTube video, Tweet and much more, and Slack will show a preview right along in your chats. You can integrate other useful tools other apps, like Zoom (for video chats) or giphy (for fun!).
Airtable is a fast and flexible way to create tables to keep track of anything, from sales leads to vacation planning to inventory management. You can organize anything with Airtable, a modern database created for everyone.
Databases are the beating heart of almost every modern business. CRMs, project management tools, content management systems, accounting tools, and more often than not a database with a form to enter data and ways to view it. If you already have an idea for the database you need, it’s simple to turn it into a working tool for your team in Airtable.
Killer feature: It’s easy enough for everyone to use it without training but powerful enough to organize any amount of data you need.
Dropbox lets you store your files online, sync them to all your devices, and share them easily. Share a folder inside your team’s Dropbox – anyone can add files and they’ll magically stay synced for everyone.
Killer feature: The new Dropbox Paper app also lets you collaborate on texts. It’s an online writing app where everyone can write together in real time, add comments and replies for feedback, and collaborate without having to make sure everyone has the same version of Word.
Canva gives businesses and professionals a very simple design platform that enables them to create amazing and professional quality graphic designs.
It’s a user-friendly, reliable design tool that makes it easy to take an idea and turn it into a stunning design. With a wide range of available formats – from print to social media – Canva allows anyone without a design background to not be hindered by ugly graphics.
Killer feature: The simple drag-and-drop design tool and a vast collection of over 1 million photographs, graphics, and fonts, can turn anyone into a decent designer.
Manage your social media marketing together with Buffer‘s tools to schedule posts, analyze performance, and publish in half-dozen social networks from just one app.
It’s a scheduling tool to keep your social media profiles up-to-date without you posting all the time. Connect your Twitter, Facebook, LinkedIn, Instagram, and Pinterest accounts, set a publishing schedule for when you want to share new posts, then add a queue of things to post. Buffer will do the rest, sharing your posts and keeping track of how they do automatically.
Killer feature: Automate your social media management, by sharing scheduled posts to multiple social media accounts from one place and viewing engagement and activity analytics.
Zapier is an online platform that connects various apps together to automate workflows easily for business and productivity.
With its powerful technology, users can move information automatically between web apps, so they can focus on the more important work at hand. The ultimate aim is to empower businesses to create automatic processes and systems.
Killer feature: Automatic storing of files via the workflows – no more searching for a document in your emails.
In case we might have missed any useful tool and service your startup uses, feel free to mention it in the comment section below to make this list more resourceful for other entrepreneurs and readers.
And to stay up to date on tips and events: subscribe to our newsletter.