Growth Metrics Your Organization Should Track
By regularly analyzing growth metrics -- data about a company’s conversion rates, retention rates, user acquisition, sales, and more -- enterprises can assess their historic performance based on business goals, while also gleaning valuable insights to create a more profitable future.
Growth metrics to track
Some of the most common growth metrics to analyze year-over-year, quarter-over-quarter, or month-over-month include:
Churn rate is a metric that indicates the number of customers or users that stop doing business with you, or the revenue you lose due to them dropping off. Avoidable customer churn costs US companies around $136 billion each year.
Cost per lead
This metric is achieved by dividing the advertising and marketing costs by the generated leads in a given time. It is essential to know the cost of generating a lead and whether it is justified or not. Preferably, the acquisition cost reduces overtime with the optimization of campaigns.
Cost of acquiring a customer
Is the cost of winning a customer. For instance, if you have a 5% conversion rate and it costs $5 to generate a lead, you'll require twenty leads to acquire one customer at the cost of $100. The goal is to achieve an acquisition cost lower than the customer's lifetime value.
Average revenue per user (ARPU)
This metric helps organizations understand what type of users generate the most revenue. To find the ARPU, divide total revenue by the number of users.
Retention rate is a key metric for assessing your organization’s health. Not only does research show that it costs five times more to get a new customer rather than keep an existing one, but too much churn will ultimately have a negative impact on a company’s long-term growth.
Annual recurring revenue (ARR)
ARR is a metric often used in the subscription economy to show the amount of money that will come in every year, over the lifetime of a client.
Conversion rates detail leads that turn into customers, or if leads fulfill a specific action. For example, a conversion can mean checking out from an eCommerce site, or it might mean a form was filled out on a landing page. These conversion goals are set at individual company levels, and each organization may have multiple conversion rate calculations.
Monthly and daily active users
Monthly active users (MAU) and daily active users (DAU) are metrics used to gauge the overall health of an organization. Not only do MAUs and DUAs indicate the perceived value of an app or product, but it can also help add context to other key metrics like customer lifetime value, and cost per acquisition.
Are you looking to analyze and take action on your growth metrics? Learn how Scuba Analytics can help!