Depending on the stage that you’re in you’ll want to concentrate on different metrics. The main element message of the graph is that in the beginning you can concentrate on a small set of metrics, but as time goes by and you’re making progress you need to add additional KPIs to your stickpit. Let’s have a closer take a look at each one of the three phases. User feedback: A lot of the user feedback that you collect in this phase is qualitative rather than quantitative, but if you talk to a larger number of potential users you could also be able to add some quantitative elements.
For example, you could ask users to rate your prototype and find out if that rating goes up as time passes. Waiting list signups: When you put up a landing page to collect email addresses for your waiting list, track how many signs you’re getting. Driving signals probably isn’t an integral concern for you at this stage but it’s a sign of interest in your product and hey, you’ll still have some space on your Geckoboard which you can fill with a nice chart!
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Once you let potential prospects try your product, the true fun begins. At that true point, you should track signups and some indicators for usage and activation, which, for apparent reasons, are precursors to your ultimate goal, paying customers. What the right indications for activation are depends on the type of your product. Maybe it’s a profile conclusion and the set up of a customized pipeline in case of a CRM application, installing a monitoring snippet for a Web analytics product or… you get the theory.
Similarly, usage metrics are specific to the application highly, so think about what the right events and guidelines are in your unique case and make sure that you instrument the application accordingly. If your solution is a little more enterprise and you’re working with a higher-touch sales model, you may even want to monitor certified leads along with trial signups. To be able to succeed you will need happy customers who do free marketing for you, in any other case customer acquisition will be an uphill battle. Therefore opt for regular Net Promoter Score (NPS) surveys. If you’re looking for the best survey tool, A suggestion is experienced by me for you.
As you’re slowly but surely addressing product/market fit and starting to get the first paying customers (yay!), your trial-to-paid conversion rate becomes one of the very most vital metrics. It’s hard to give you a benchmark, as your conversion rate not only depends upon the grade of your product and the onboarding experience but also on many other things such as leads quality, prices, and many other factors. Important is your retention Equally, usually tracked by calculating churn (the inverse of retention), since your CLTV (customer lifetime value) is a primary function of how much you charge your customers and how long they stay on board.
As an extremely rough guideline you should attempt to get your churn rate to at least one 1.5-3% per month. Make sure to track churn not only on an account basis but also on an MRR basis. Your MRR-based churn rate will hopefully be significantly lower than your account-based churn rate, since smaller customers tend to have an increased churn rate and because your loyal customers will ideally pay you more and more as time passes.
8, blending up annual and regular plans. Finally, if you would like to get a good estimate of your customer lifetime, take a look at retention on the cohort basis. If you don’t have a KPI dashboard yet that gives you an at-a-glance look at your key metrics, is the time to build one now. Here’s a template that I’ve created, along with some additional notes.
As you’re moving on, the most important metric becomes MRR arguably, and specifically net new MRR that you’re adding each month. Also monitor your ARPA (average income per account). It’s an important metric at all times for obvious reasons, but as you’re nearing the next thing it’s becoming even more important. 500k MRR, the biggest problem (besides growing a more impressive organization and learning all kinds of growing pains of course) is to find ways to profitably acquire customers at a higher scale.
By this time you’ve selected all the low-hanging fruits, and you may have maxed out what you can reasonably devote to AdWords to buy traffic and leads. Therefore you’ll have to focus on the relationship between your CLTV and your CACs (customer-acquisition costs), your CLTV/CAC ratio, which measures the ROI on your sales and marketing investments.
Another way to check out it is your CAC’s payback time, which tells you how many months of subscription income it requires recoup customer acquisition costs. If I had to choose I’d pick this one, since CLTV is an estimate which can be more or less accurate always. I don’t have a straightforward and general advice because of this issue, I might address it in another post. If you’re not sure which metrics to track, e.g. which events in your application, err on the side of tracking too much data if you have no immediate use for it even.