Why?
Because a reasonable KPI system can enable the company's management team and potential investors to accurately grasp the company's development and make rational analysis, which is not affected by any emotional factors and does not include deliberate exaggeration.
Of course, this does not mean that the founder should be too obsessed with KPI, or only pay attention to KPI, because it is only an indicator used to measure performance. On the contrary, we hope that the founders can effectively use relevant tools and take correct measures to improve and optimize the company's business. The advantages and disadvantages of these measures will be reflected in KPI.
Simply put, the founders should not only pay attention to the KPI itself, but also understand the deep meaning of these indicators and find out the factors that will affect them.
In addition to fully understanding KPI, enterprise founders should also formulate strategies to optimize these indicators. The following article will list the more important KPIs of 12. However, it should be noted that some of these indicators are aimed at a certain type of enterprise and may not be applicable to other enterprises. In addition, I will only give some basic introduction to each indicator, and will not involve details, nor will I expand its calculation method in detail.
No.65438 +0 Customer Acquisition Cost (CAC)
CAC refers to the average sales and marketing cost for an enterprise to acquire each user. This indicator can let us clearly see the effect of marketing expenditure. Of course, only by analyzing this indicator together with other indicators below, or comparing it with competitors' CAC, can we draw a more comprehensive conclusion.
Customer retention rate ranked second (CRR)
It's one thing to find a way to get new customers, but it's another to be able to keep them. Usually, it is more important to retain customers. The customer retention rate of an enterprise refers to the proportion of original paying customers who choose to continue to spend money on products and services within a period of time. The corresponding indicator of retention rate is turnover rate, that is, the proportion of customers lost by enterprises in a period of time. If an enterprise has a high customer retention rate in a specific period, it means that its products can better attract customers, that is, satisfy customers. In addition, the index can also reflect the capital efficiency of enterprises.
The third largest customer lifetime value (LTV)
LTV refers to the sum of the benefits that each buyer may bring to the enterprise in the future. If the founder wants his company to achieve sustainable development, then he must understand this indicator, and it is best to analyze it with CAC.
Fourth, the ratio of CAC to LTV.
We believe that the ratio of CAC to LTV is the golden index to measure the performance of enterprises, because it can accurately express the sustainable development ability of enterprises.
Fifth, the time required to recover the customer's purchase cost (CAC recovery time)
This indicator measures the time required for an enterprise to recover the original cost of acquiring new customers, that is, the time required to obtain sufficient net income to offset the acquisition cost of customers. This indicator has a direct impact on the cash flow of enterprises.
Item 6 Recurrent fixed expenses
As mentioned above, CAC measures the variable cost that enterprises need to acquire customers, while this indicator measures the fixed cost that enterprises need to acquire customers. The ratio of fixed cost to operating income can reflect the capital efficiency of enterprises. For example, assuming other conditions remain unchanged, the operating income of Company A is $6,543.8+$0,000, and the fixed cost is $200,000; The operating income of Company B is $6,543,800+and the fixed cost is $400,000, so the capital efficiency of Company A is twice that of Company B. ..
Monthly capital consumption of enterprises in the seventh period
The founder needs to calculate the monthly capital consumption according to the income and monthly cost (including fixed cost and variable cost) of the enterprise. Simply put, this indicator measures the net cash consumed each month when the net cash flow of the enterprise is negative. If a company's cash at the beginning of the month is $654.38 million and the cash at the end of the month is $90,000, then its monthly capital consumption is $654.38 million. And if a company's monthly net cash flow is positive, there is no problem of capital consumption.
Capital runway no.8
For a startup, it is very important to pay attention to the capital runway. Good cash flow requires a long capital runway. The so-called capital runway refers to the time that an enterprise can survive before its capital runs out. Usually we use the monthly capital consumption of an enterprise to calculate the number of months it can continue to survive. Generally speaking, this data should be at least 12 months. Of course, it would be better if there were 18 months. This indicator can remind founders to start financing at the right time.
Ninth gross profit margin
This indicator is usually expressed as a percentage, which can help you price the product and find the most suitable price according to the production cost. In other words, it can tell you different profit margins brought by different selling prices. In a word, this index is very important, which can help us to study the product cost and return on investment, and grasp the company's expansion ability and sustainable development ability more clearly.
No.65438 +00 conversion rate
The conversion rate is a very convincing indicator, which not only shows the company's ability to sell products, but also shows the demand of consumers for the company's products. If we can continuously track and evaluate the conversion rate and take regular measures to improve it, it will play a powerful role in promoting the company's business.
NO. 1 1 total merchandise value (i.e. total merchandise volume, GMV).
Many enterprises may find that total income is not a good measure of their financial situation. This is especially true for those enterprises whose income only accounts for a small part of the total transaction amount. In this case, the role of GMV is highlighted, which measures the total value of all products or services sold by enterprises.
Monthly active users (MAU) in issue 12
MAU is a key KPI for enterprises whose main products are applications, online games or social networking sites. It refers to the number of users who frequently use a website or a program in a 30-day period. Paying attention to this indicator can help enterprises see current and future income or potential.