Key performance indicators, or KPIs, are a common business term that you’ve likely heard before even if you’re not familiar with the acronym itself. To put it simply, they help to measure and evaluate how well your business is doing by looking at metrics like sales, profits, customer satisfaction, and more. Small businesses in particular can use key performance indicators to stay on track toward their ultimate goals of becoming profitable and sustainable businesses.
The Metrics That Matter
Your startup has limited resources and you must track what matters most. The reason is simple: If you don’t pay attention to your key metrics, chances are that your startup won’t last. So what are some of these critical key performance indicators? Here are some of our favorites. The Three Ps: It doesn’t matter how much traffic or revenue you have if none of your users are sticking around or coming back for more. One of our favorite key performance indicators for startups is percent retention—it helps give a good picture of how well users like a product or service enough to come back later on. For example, if 40% of your users return after day one, 60% after day two, and 70% after day three, you can assume they will continue to stick around at similar rates over time. Users who visit a site once but never return aren’t engaged with a product or service. You want as many people as possible to be repeat visitors—and percent retention shows you just how well you’re doing in that regard. Of course, there are other key performance indicators for startups related to user engagement (such as repeat visits per month) but we think percent retention gives an important overview of where things stand at any given time.
What are Key Performance Indicators for Startups?
Key performance indicators are the essential business metric that provides crucial insights into a company’s financial and non-financial metrics. A KPI is typically used as a tool to evaluate both internal and external factors of a business. In startup businesses, KPIs are extremely important in helping monitor success, as well as recognize weaknesses and opportunities when they arise. When it comes time to create key performance indicators for startups, you must consider these four aspects: selection process, frequency of measurement, metric description, and measurement level.
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