10 KPIs for Startups to Start Measuring Today
As an early-stage startup founder, it’s easy to lose track of your company goals and changing market demands. That’s why measuring the right Key Performance Indicators (KPIs) for startups is crucial.
Research shows that 42% of startups fail due to misreading market demand, while 29% run out of funding entirely.
KPIs are measurable values that help you track progress, evaluate sales and marketing performance, and keep your business on course.
They help you make smarter decisions, identify potential challenges early, and align your efforts with long-term goals and customer needs.
But with so many different KPIs to measure, which ones are the right ones for your company?
In this article, we’ll explore 10 essential KPIs for startups and how they can help your company thrive.
10 KPIs to Track For Your Startup
As a founder, there can be an overwhelming amount of information about KPIs. Which KPIs make sense for a startup? And at which stage?
Here are 10 important KPIs to track for your startup.
1. Customer Acquisition Costs (CAC)
Customer Acquisition Cost (CAC) is the cost of acquiring a new customer through sales and marketing. A high CAC may signal inefficiencies in your sales funnel or unsustainable advertising strategies.
Why it matters: CAC helps you make cost-effective decisions on customer acquisition efforts, which is critical for early-stage startups with limited budgets.
Formula:
2. Customer Lifetime Value (CLV or LTV)
Customer Lifetime Value (CLV) estimates how much revenue a customer generates during their relationship with your business. CLV must be higher than CAC to maintain long-term profitability.
Why it matters: A higher CLV than CAC means you have a product-market fit and customers know your product’s long-term value.
Here’s the formula to calculate CLV:
CLV = Average Purchase Value × Purchase Frequency × Customer Lifespan
CAC/LTV Ratio
The CAC/LTV Ratio is a key metric that measures the efficiency of acquiring customers relative to the revenue they generate. It helps evaluate the sustainability and profitability of your customer acquisition efforts.
How it works:
- Divide Customer Lifetime Value (LTV) by Customer Acquisition Cost (CAC).
- A healthy ratio typically ranges between 3:1 and 5:1:
- Higher (>5:1): Indicates untapped growth potential, but you might be under-investing in acquisition.
Why it’s essential for early-stage startups:
- Provides insight into whether your product has strong market demand and is cost-effective to scale.
- Helps achieve product-market fit by validating that acquired customers are valuable enough to sustain growth.
3. Monthly Recurring Revenue (MRR)
MRR represents the predictable, recurring revenue a business earns monthly from subscriptions. As one of the key KPIs for SaaS, it serves as the backbone of success, providing a clear picture of your monthly revenue and financial health.
Why it matters: MRR helps you identify growth trends, evaluate business performance, and plan strategically for the future. It’s a critical metric for understanding financial stability and forecasting.
How to calculate MRR:
MRR = Active Customers × Average Revenue Per Customer (ARPC)
4. Annual Recurring Revenue (ARR)
This metric tells you how much recurring revenue you are earning every year.
Why it matters: ARR helps startups measure long-term revenue growth and track customer loyalty.
Formula:
ARR = MRR × 12
5. Churn Rate
The churn rate is the amount of customers you lose in a specific period. The metric helps you understand whether your product has long-term value to retain customers.
Why it Matters: A high churn rate means your product isn’t fit for your target audience.
According to the KBCM Technology Group Private Company SaaS Survey in 2023, 150 private SaaS companies were surveyed about several important SaaS metrics.
For churn, they found that:
- The median gross dollar churn (which describes how much revenue is lost YoY) for SaaS companies is 12%.
- The annual median logo churn (which describes how many customers are lost YoY) is 13%.
- The median annual gross dollar churn is 12%.
6. Retention Rate
This metric tracks returning customers who actively use your product. A high retention rate means happy customers who realize your product’s value and can be a great asset to scale your growth.
Why it Matters: The retention rate tells you how many loyal customers you have. Loyal customers are also more likely to recommend your product, reducing churn and fueling organic growth, which is critical for any startup aiming to scale.
7. Activation Rate
The activation rate tracks how many new users take that critical first step with your product—whether it’s completing onboarding, integrating their tools, or making their first purchase.
It directly measures how effectively your product’s value is communicated early in the user journey.
Activation varies based on your business type:
- For a B2B SaaS product, activation might mean a team setting up their account and integrating with their CRM.
- For a B2C SaaS product, activation could be an individual uploading their first file to a design tool or creating a playlist in a music app.
Why it matters: The activation rate pinpoints where you lose potential customers in the funnel. Understanding this helps optimize your onboarding experience and drive users toward long-term engagement.
8. Burn Rate
Burn rate is how quickly you are burning through your funds. Every startup has a limited budget, but if you are not watching your burn rate, you could run out of money faster than expected.
Why it matters: Burn rate helps you plan funding or cut costs where necessary.
9. Net Promoter Score (NPS)
NPS asks a simple question: “How likely are you to recommend us to a friend or colleague?” (rate 0-10).
It’s a quick way to gauge customer satisfaction and loyalty.
Although NPS is a qualitative measure, you can use it to categorize your customers to improve your sales or marketing efforts.
- Promoters (9–10): They love your product and will recommend it.
- Passives (7–8): Neutral customers who might churn.
- Detractors (0–6): Unhappy customers who could hurt your reputation.
Why it matters: A high NPS indicates strong loyalty, while a low score highlights your product needs improvement.
10. Net Revenue Retention (NRR)
Net Revenue Retention measures the revenue retained from your current customers, factoring in upgrades, downgrades, and churn. An NRR over 100% means you’re retaining customers and growing their spending.
Why it matters: NRR helps you understand your product’s value among loyal customers.
Additional Key Metrics for Startups:
- Account-Based Marketing (ABM) Metrics: these KPIs help you track the success of your sales and marketing campaigns such as Account-Based ROI, Marketing Qualified Accounts (MQAs), and Pipeline velocity.
- Product and Engagement Metrics: These include Daily Active Users (DAU), Monthly Active Users (MAU), or Quality Defect Rate.
- Investor-Ready KPIs: These are essential financial KPIs for startups that you use to pitch investors and VC funds such as payback period, gross margin, average selling price, EBITDA, and CAC/LTV ratio.
Aligning Relevant KPIs To Your Startup’s Lifecycle
Each KPI is specific to a startup’s growth stage and business model. For example, in your startup’s first year, metrics like CAC, activation rate, and burn rate are more actionable for tracking early progress.
To give you a better perspective, we’ve divided relevant KPIs into five stages of a startup’s lifecycle:
- Foundation Stage
- Survival Stage
- Market-fit Stage
- Take-Off Stage
- Resource-Maturity Stage
Note: For early-stage startups, foundation, survival, and market-fit stages are more important before you scale to mature stages.
1. Foundation Stage
The foundation stage is also known as the pre-seed or existence stage. Startups focus on bringing new customers and creating a product-market fit.
The founder oversees all aspects of the business, including sales and marketing.
The following KPIs are important to track in the foundation stage:
- Customer acquisition cost
- Runway rate (the metric to track time left until funds run out), and
- Burn rate.
For non-financial (qualitative) indicators, you can monitor market validation metrics like feedback from potential customers, signups, and pre-orders.
2. Survival Stage
You’ve entered the survival stage if your startup has a workable business model and enough customers to sustain basic operations.
The focus shifts from proving your business exists to balancing revenues and costs.
Generating enough cash flow to cover daily operations and fund future growth is critical at this stage.
KPIs to track:
- Customer retention rate
- Churn rate, and
- Monthly recurring revenue (MRR).
Qualitative indicators to track:
- Networking metrics like the number of referrals or partnerships
- Net promoter score (NPS).
3. Market-fit Stage
The market-fit stage is when your customers realize your product’s long-term value. At this point, you have high returning customers and new signups with stable revenue.
Analyzing key metrics can help you decide whether to scale your business or work on stability.
You’re also expanding your team and building systems to handle the growth at this stage.
KPIs to track in this stage include:
- CAC/LTV ratio
- Churn rate
- MRR and ARR.
4. Take-Off Stage
The take-off stage is where your startup grows fast and things get complicated. You’re hiring more people, managing bigger teams, and figuring out how to keep cash flowing.
SaaS Investor Neeraj Agrawal in his T2D3 framework calls this the most critical time when funds run out or founders fail to expand their teams.
It’s important to monitor the following KPIs to stay on track:
- Revenue generation
- Employee productivity rates
- Cash flow management, and
- Debt-Equity ratio (whether you’re taking too much debt to grow).
5. Resource-Maturity Stage
In the Resource-Maturity Stage, your business is stable and running smoothly. When you reach this stage, focus on KPIs that help you stay profitable and competitive.
Setting KPIs That Drive Startup Growth Using SMART Goals
Your KPIs should align with your startup’s SMART goals:
- Specific: Your KPIs should clearly define your goals.
- Measurable: Make them simple and easy to track.
- Achievable: Ensure they’re realistically achievable.
- Relevant: Do you have the right resources, knowledge, or ability to meet your business goals?
- Time-bound: Set a deadline for achieving the goal.
Here are some startup-specific KPIs that famous companies used in their growth stages:
- Airbnb: Bookings per listing
- Uber: Rides per active driver
- Slack: Messages sent per user
- Twitter: Tweets per user
How to Select and Prioritize KPIs for Your Startup
As an early-stage startup, too many or few KPIs make it hard to understand where the actual problem lies.
You need a clear understanding of your business model and goals before you decide what KPIs are more actionable for you.
For example, tracking daily sales activities is key for an sales-led company because it indicates how much outreach your team has done against your target market.
Most KPI dashboards can track your marketing and sales metrics, but how do you align these KPIs with your startup’s specific goals, business model, and growth stage?
Revenue Reveal takes a more holistic approach by analyzing market trends, customers’ buying patterns, and your startup’s business goals to find hidden metrics you can use to track. Not sure where to start? Get in touch with our experts.
