You’re in charge of a startup. What are the most important metrics for evaluating your performance?

2 Customer acquisition cost

Another important metric for your startup performance is customer acquisition cost, or CAC. This is the average amount of money you spend to acquire a new customer, including marketing, sales, and other expenses. CAC reflects your efficiency and effectiveness in reaching and converting your target audience. To calculate your CAC, you can use this formula: (total acquisition expenses / number of new customers) . Ideally, you want to keep your CAC as low as possible, while maximizing your revenue and growth.

3 Customer lifetime value

Customer lifetime value, or LTV, is the estimated amount of money you can expect to earn from a customer over their entire relationship with your startup. LTV represents your ability to retain and satisfy your customers, and to generate recurring or repeat revenue. To calculate your LTV, you can use this formula: (average revenue per customer x average retention rate x average customer lifespan) . Ideally, you want to increase your LTV as much as possible, while minimizing your CAC.

5 Net promoter score

Net promoter score, or NPS, is a measure of how likely your customers are to recommend your products or services to others. NPS reflects your customer satisfaction, loyalty, and advocacy. It also influences your word-of-mouth marketing, referrals, and reputation. To calculate your NPS, you can use this formula: ((percentage of promoters - percentage of detractors) x 100 . Promoters are customers who rate your products or services 9 or 10 out of 10, while detractors are customers who rate them 6 or lower. Ideally, you want to increase your NPS as much as possible, while addressing the feedback and concerns of your detractors.

6 Burn rate and runway

Burn rate is the amount of money you spend each month to run your startup, including salaries, rent, utilities, and other expenses. Burn rate shows your cash flow and financial sustainability. Runway is the amount of time you have left before you run out of money, based on your current burn rate and cash reserves. Runway shows your financial viability and urgency. To calculate your runway, you can use this formula: (cash reserves / burn rate) . Ideally, you want to extend your runway as long as possible, while increasing your revenue and reducing your costs.

7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?