Proven Metrics and Important KPIs for Startups to Measure Success by@vicloskutova

Proven Metrics and Important KPIs for Startups to Measure Success

Victoria Loskutova HackerNoon profile picture

Victoria Loskutova

Victoria is a writer and co-founder of Badass Bureau (SaaS) - a PR agency for female founders and executives in tech.

Metrics and key performance indicators (KPIs) are essential in measuring venture success. But it is impossible to have only one set of metrics for every company. It is different for a mature business compared to a newly launched startup. All products are unique and require a specific approach towards goal setting depending on the ambitions and project stage. While startups want to be fast in acquiring new customers and getting funds, older businesses with large customer bases might focus on retention instead. Continue reading to know the exact success metrics and important KPIs for startups to track.

KPIs vs. metrics

To understand the importance of product metrics and KPIs, startup founders should also know the difference between the two. Both metrics and KPIs are quantifiable measurements of strategic or tactical activity. The difference is that KPIs reflect startup goals and objectives, therefore they are strategic, and metrics are tactical, as they reflect the success of the activities that support the accomplishment of the KPIs. For example, a metric can be the number of times a document was downloaded from the website or videos played on the app over a particular period. An example of one of the most important KPIs for startups is the targeted increase in revenue over a specific time.

Strategy drives metrics

Both product strategy and company strategy define what your startup KPIs should be. Think through the metrics you can use to align and drive your teams and ensure your business is doing well. Let's take an e-commerce startup as an example. It can achieve phenomenal results by incentivizing the team to provide the best user experience. If the existing users love the product and customer experience, a lot of its revenue will be from returning customers who buy twice as much because they are happy. And because the users are happy, many new customers will come through word of mouth. By creating a customer strategy that drives loyalty and the best customer experience possible, an e-commerce startup can enable growth.

The framework of Key Product Metrics

A North Star KPI Startups Live by

A "North Star metric" term was coined by a startup investor Sean Ellis to align the teams around a single goal, make the meetings easier and administration simpler. It is named after Polaris, a star that lies right above the Northern pole, and it's a KPI startup should live by. Often called a focus metric, it helps companies know that they are still going in the right direction. This metric is the one that matters most to your company. It drives customer value, leads to revenue, and measures progress, and all the departments should contribute to improving it. But paying attention to only this metric will not have a good impact on your business. Softer framing of a focus metric working together with the whole set of key metrics will do, and I'll describe the algorithm below. Now, here’s how to define your “North Star.”

To understand your focus metric, think about the value you deliver to your customers and the natural frequency with which you are providing that value. Here are some examples:

Media provides value by delivering the content. Its valuable moment is reading articles or watching videos. Some users can watch videos or read articles on a daily or weekly basis. It means that the natural frequency of delivering these value moments to users is daily or weekly.

The value moment can be a started chat or a shared file with SaaS. Users can share files every week or every month - it depends on the SaaS product. Therefore, the natural frequency of delivering the value to the users can be weekly or monthly.

The finance sector can have a transaction as a valuable moment. Users can make weekly, monthly, or quarterly transactions, and it is a natural frequency with which value is delivered.

Here are some other tips on how you can define your North Star or focus metric:

  • Tie it to customer value, not to company value. The value you provide to your customers is worth more than the amount of money they pay for it.
  • Make sure it indicates your startup's future success and is well connected to revenue, retention, and other key product metrics.
  • Remember that you can't measure everything, and that's ok. You can use tech tools to fill in some data gaps.

The set of important KPIs for startups to track

There is a set of key metrics for measuring the success of any startup. Let’s break the most important KPIs for startups into categories:

Reach. Number one KPI startup should track. It answers the question: "How many people have used your product recently?" Knowing your reach, you will know the maximum amount of users who can potentially become active, whether you re-engage them or see the organic growth.

Active users is another KPI startup should follow. How many people performed a key action and received value from your product recently? Value could be one action or a set of actions, like listening to one podcast or three of them. By tracking active users, you can see if more or fewer people are getting value out of your product.

Engagement is also among the most important KPIs for startups for measuring success. It indicates how committed your users are to your product compared to just active usage. To measure this metric, you should divide the number of key actions taken by your active users count.

Retention is a KPI startup should measure to answer whether the active users have enough reasons to come back. A 7-day period is long enough to see the revisiting cycle of the customers and short enough for teams to act fast.

Business-specific and Other KPIs to Consider

Your analytics strategy doesn't stand only on the metrics listed above, even if you add specific metrics to dig deeper into data. Some of the metrics depend on your business model.

Activation can be a milestone of the onboarding experience if it drives long-term usage. Keep an eye on this metric to know if you are becoming more successful at activating users. Some examples of activation are making the first purchase, registering on the app, or making two transactions within a specific period. To isolate activation from the organic user growth, it is better to view this metric in percentage instead of headcount.

Some dating apps have a "good churn" metric that shows how many customers found love and left the app. Initially, it means losing customers. But satisfied users recommend the app to their friends, so it is good for business in the long run. To identify business-specific metrics, you should answer the question: "How else does my business deliver value?"


It is imperative to connect the dots between the focus metric and other important KPIs for startups to measure success. Then your developers, product managers, marketers, and analysts can see how their work influences the overall product's performance. Remember that it is not enough to track and observe KPIs; it is important to use your data for product improvement and effect change. If you see exponential growth in revenue, active users, and retention, it means your startup KPIs are well-defined, and your strategies are aligned and working for business success.

Victoria Loskutova HackerNoon profile picture
by Victoria Loskutova @vicloskutova.Victoria is a writer and co-founder of Badass Bureau (SaaS) - a PR agency for female founders and executives in tech.
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