5 Types of Data All Startups Should Be Tracking and Analyzing
Startups must master data tracking and analysis if they want to go from a small fry to a big fish in their chosen industry.The trick is to know which metrics are most important, so here are just a few points of interest which can fuel decision-making and strategizing early on.
Customer acquisition cost – to determine marketing ROI
What you have to spend to get new customers onboard is relevant because it basically tells you how effective your marketing is at a given point in time.If your customer acquisition cost(CAC) outweighs the value that each customer represents, then you’ll be on a hiding to nowhere.Calculating CAC is as simple as dividing the amount you spend on marketing over the number of customers you acquire within a fixed timeframe.
Historic costs data – to better predict current and future projects’ costs
A straightforward way of calculating the potential price you’ll pay for any new projects you are planning is to look at what costs have been incurred for similar projects in the past.Historic costs data is relevant in all industries, but has particular importance in areas like real estate and construction. Thankfully, with modern data analytics for real estate projects, tracking historic costs and applying these to new projects is a breeze.
Market size – to assess the scale of the opportunity for growth
No startup should attempt to enter a market which it hasn’t researched thoroughly. Otherwise, it might find that even if it comes to dominate the competition, there isn’t enough of a market there to begin with to make this worthwhile.Establishing the total addressable market(TAM) should be a priority. It lets you determine not only the levels of demand you can expect, but also how your revenues might fare in the long term as your influence grows.
Sales data – to gauge the overall performance of the business, as well as of individual employees
Sales figures are perhaps the simplest expression of success or failure in the business world, and so it’s a given that any startup will be looking at them closely.Of course you can only justify this if you are also looking to learn from the sales data at your fingertips, and interpret what this tells you about the various aspects of your business.Sluggish sales could be down to all sorts of things, from imperfect marketing to the quality of the product itself. Just knowing that there’s an issue is not enough; you have to dig into the data in more detail to highlight the problem areas and nail the salein the future.
Churn rate – to achieve further optimizations and improve retention
No business can hope to retain every single one of the customers that it acquires. However, if you’re losing more customers than you gain, you’ll quickly run out of people to purchase your products and services.Churn rate is the difference between how many customers you had onboard at the start and end of a chosen period, whether that’s a month, a quarter, or a year.Of course you can counteract churn through customer acquisition, but this isn’t the best long term strategy if your CAC is steep.
Final thoughts
These are not the only metrics that have to be in your sights as a startup founder. However, getting to grips with important data points such as these will make it less of an uphill struggle when you decide to delve into other types of information relating to business performance further down the line, so don’t put off embracing analytics.