Tracking the right metrics is crucial for tech startups to measure progress, make data-driven decisions, and attract investors. Without proper metrics, startups risk misallocating resources, misjudging growth, or overlooking critical problems.
This article highlights the key metrics every tech startup should track to ensure sustainable growth and success.
1. Monthly Recurring Revenue (MRR)
Represents the predictable monthly income from subscription-based products or services.
Tracks growth trends and revenue stability over time.
Helps forecast future revenue and plan budgets.
MRR is essential for SaaS startups and subscription-based business models.
2. Customer Acquisition Cost (CAC)
The total cost to acquire a new customer, including marketing and sales expenses.
Helps evaluate the efficiency of marketing campaigns and sales strategies.
Lower CAC relative to revenue indicates a healthy growth strategy.
Monitoring CAC ensures startups don’t overspend on customer acquisition.
3. Customer Lifetime Value (CLTV or LTV)
The total revenue a startup expects to earn from a customer over their relationship.
Helps determine sustainable marketing spend and retention strategies.
A high CLTV-to-CAC ratio indicates strong profitability.
LTV provides insight into long-term customer value and business sustainability.
4. Churn Rate
The percentage of customers who stop using a product or service over a given period.
High churn may indicate product dissatisfaction or poor retention strategies.
Reducing churn increases revenue and strengthens customer relationships.
Monitoring churn helps startups improve product offerings and customer experience.
5. Burn Rate
The rate at which a startup spends its cash reserves to cover operating expenses.
Critical for assessing runway—the time before funding runs out.
Helps prioritize expenses and manage financial health.
A controlled burn rate ensures a startup can survive until profitability or the next funding round.
6. Active Users (DAU / MAU)
Measures engagement through Daily Active Users (DAU) and Monthly Active Users (MAU).
Indicates how frequently customers interact with the product.
High DAU/MAU ratios suggest strong user retention and engagement.
Active user metrics reveal product adoption and customer satisfaction.
7. Conversion Rate
The percentage of visitors or leads who take a desired action, like signing up or making a purchase.
Key for optimizing marketing, onboarding, and sales funnels.
Higher conversion rates indicate more efficient user acquisition and monetization.
Monitoring conversions improves growth strategies and revenue performance.
8. Net Promoter Score (NPS)
Measures customer satisfaction and loyalty by asking how likely users are to recommend your product.
High NPS indicates satisfied customers and potential organic growth.
Can help identify areas for improvement based on user feedback.
NPS provides qualitative insight into customer experience and brand perception.
9. Runway and Funding Metrics
Measures how long a startup can operate with current cash reserves.
Key for planning fundraising rounds and controlling expenses.
Calculated based on current burn rate and available capital.
Understanding runway helps founders make informed strategic decisions.