How to Pick the Right KPIs for Your Startup
Measuring growth within a startup can be tricky, but if you find the correct KPIs to follow over time it will be a lot easier to see true growth. I’ve collected some thoughts we used at Proposales to define our indicators.
1. Find a KPI to measure users…
…that gives you insights into how many who are getting value from your service.
Example: Monthly Active Users (MAU)
This only shows that your service provides some value (undefined amount) that makes the user coming back at least once every month.
Defining the meaning Active in MAU can be specific for your product, but “any logged in interaction the last 30 days” is a great starting point — it’s being used by Facebook, Twitter & Spotify among others.
2. Find a KPI to measure value…
…that gives you insights into how much value your users get form using your service.
Example: Conversations/Reach/Accepted Proposals etc.
This is a good complementary KPI to be used to measure the total value you bring to your users. Can with ease be divided by MAU to get a number on average value per user.
It’s very important that the value KPI is aligned with the goal of your users. Go back to the core problem you’re solving or simply ask your users.
Having one or a few value KPIs to complement your primary KPI is a great value to evaluate different parts in your product. Some actions might be valued more than others inside the product. Instead of trying to define the relative value for different parts, don’t be afraid to include a few additional complementary KPIs. If the value KPI as well is aligned with your pricing model, it’s BINGO!
In the end it’s about provide a product that delivers more value to the users than they can get from any of your competitors. The MAU will give you a hint of the minimal value you need to provide to beat your competitors.
At Proposales we measure Monthly Active Users (any logged in interaction the last 30 days) and Accepted Proposals as our two most important indicators for growth right now. To survive as a SaaS company is great to keep track of MRR and ARR as well, but from my perspective the revenue will follow a used and loved product.
How are you measuring growth? Leave a comment!
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