Metrics & KPIs

Collection of resources about metrics & KPIs.

 
 

Business Modelling and KPI

We constantly work with the portfolio companies to make sure we are tracking the right metrics and KPIs for assessing the true status of the business. 

We have held a few different sessions with the companies to help them navigate the technicalities of the business modelling and planning process. There are several approaches to this and, ultimately, it always depends on the specifics of your business. We report below some guidelines and marketing material from a workshop held by Eckhard Ortwein from Lean Case, a Business Modelling tool. 


Action Metrics

Action Metrics helps and supports startups to harvest their data and turn it into valuable information to improve operations, fundraising, and growth. It is founded by Melinda Elmborg, an expert in data-driven entrepreneurship, who previously worked as a Business Intelligence Analyst and in VC at Daphni. Today, Action Metrics coaches startups on which metrics that matter or join the startup as a freelancer to build dashboards.

Read more here.


SaaS metrics

Most of our portfolio companies with SaaS business might already have the main metrics in place. Feel free to use the resources below (extracted from Chart Mogul's Cheat Sheet) to add new metrics or double check your current tracking methods if needed. 

Monthly Recurring Revenue (MRR)

Measure of normalised (amortised) monthly subscription revenue. 

MRR Movements: 

  • New business MRR: Only the MRR at the moment a lead converts into a paid customer (for the first time) is counted.

  • Expansion MRR: Any increase in the MRR of an existing customer, e.g. an increase in quantity, upgrade to a higher plan, adding an additional subscription, or a discount expiring.

  • Contraction MRR: Any decrease in MRR, e.g. a decrease in quantity, downgrade to a lower plan, or a discount being added.

  • Churn MRR: The MRR at the time a customer cancels (or fails to renew) their subscription (and they don’t have any other active subscriptions).

  • Reactivation MRR: When a previously churned customer moves back onto a paid plan.

Annualised Run Rate (ARR)

ARR = MRR x 12

Annual value of the monthly subscriptions. 

Average Revenue Per Account (ARPA)

ARPA = SUM of all customers' MRR / # of customers

The average MRR across active customers. IF a customer has multiple subscriptions these should be combined and counted as one customer before the ARPA is calculated.

Average Sale Price (ASP)

ASP = Sum of all New business MRR in a period / # of new customers in the same period

The average MRR of new customers at the moment they convert to paid account. It is a useful measure of the effectiveness of the sales team a driving new customer deal sizes higher.

Customer Renewal Rate (Retention Rate)

RR = # of customers who renewed their contract / Total # of contracts up for renewal

Rate at which customers renew their subscriptions.

 

MRR Renewal Rate

MRR RR = Tot MRR of renewed subscriptions / Tot MRR of subscriptions up for renewal

Rate at which MRR is being renewed. Renewal rate can be a more meaningful rate thran churn rate where there is a limited set of data to analyse. 

Customer Acquisition Cost (CAC)

CAC = Sum of all sales & marketing expenses / # of new customers added

Estimate of the cost to acquire a customer. 

Customer Churn Rate

Churn Rate = # of customers who churned in period / Tot # of customers at start of period

The rate a which customers are cancelling their subscriptions. Note: It is important not to mix subscriptions with significantly different billing periods.

Net MRR Churn Rate

MRR Churn Rate = (Sum of Churn & Contraction MRR - SUM of Expansion & Reactivation MRR) / MRR at start of period

The rate at which MRR is lost through downgrades and cancellations, offset by account expansions.

 

Customer Lifetime Value (LTV)

LTV = ARPA x Gross Margin % / Customer Churn Rate

Estimate of the average total value of a customer, over their lifetime (from signup to churn) 


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