Excellent Software Company Metrics Article
I love solid metrics! Not for the sake of metrics (a common problem), ones that drive real business decisions. Clate Mask guest posted an article on Venture beat that outlines his Top 5 metrics for software CEO's. It is really worth a read to learn what they are and why he thinks they are important.
The list:
The list:
- Cost Per Acquisition (CPA) - He includes sales and marketing costs and takes into consideration the sales cycle in his metric (love this idea)
- Revenue Per Employee - Good rule of thumb that a strong business will eventually hit $200K/employee. The climb up to this number is worthy of an article of its own.
- Customer Loyalty - More of a qualitative metric from survey data like Net Promoter Score. I like using this as an early indicator of potential problems.
- Lifetime Customer Value (LCV) = Average Revenue Per User/Churn - A great metric to keep in perspective 1) the value of your current customers and 2) other ways beyond new sales to increase the value of your company (increase ARPU or reduce Churn)
- Usage - This is an interesting metric that will take some time to properly define for your business (it will be different for each business). I agree that if your customers actively use your solution this bodes well for a company, but wonder if just focusing on a customer loyalty metric is enough?
