The Ultimate Guide to Startup Marketing Metrics and Growth Strategies

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Founding a startup can be one of the most exciting experiences in business. Arguably, it is also one of the most stressful experiences, and it can easily become overwhelming, especially for sole founders or very small teams.

Putting in place clear marketing metrics helps founders, their teams, and their advisors understand which tactics and elements of the company’s marketing strategy are working well and where improvements are needed. One critical distinction startup teams must understand is the difference between essential metrics and growth strategies.

Fundamental marketing metrics

The United States has long been the birthplace of some of the world’s most successful startups. Mention brands like Google, Amazon, Instagram or Tesla, and the audience may no longer think of these companies as startups. But like thousands of startups today, these brands were once in their infancy, looking to attract their first users and initial customers.

Put simply, these household names faced some of the same challenges that someone starting a company today is dealing with. One challenge is defining meaningful marketing metrics to measure customer success.

Clear metrics are perhaps never more important than in this initial stage of a business. After all, with limited resources, each dollar spent should make an impact.

Which fundamental marketing metrics startups need to track

Return on investment
Lead generation and conversion
Product-market fit

Perhaps the most fundamental marketing metric to track at any stage of a startup’s life is the return on investment (ROI). ROI shows how much money your team spent on specific marketing activities and how many leads were generated or sales converted as a result. Understanding marketing ROI gives founders and their teams an understanding of whether their approach is working.

Lead generation is another key marketing metric. Building awareness and generating interest in the brand is critical for a new business. Picture a typical sales funnel that starts wide at the top and becomes progressively narrower as it moves toward consideration, conversion and customer loyalty. For a new business, growing the top of the funnel and generating leads is critical. Without leads, there will be no conversions.

If your startup is at an earlier stage of its life, you may need to focus on different metrics altogether. Any company still fine-tuning product development and looking for initial funding needs to demonstrate product-market fit to potential investors.

Which metrics matter most can differ depending on the stage of development of a specific startup. As companies move from the conceptual stage to minimum viable product to launching their full product, they may need to adapt their fundamental marketing metrics to ensure that the leadership team has meaningful, actionable information at their disposal.

Marketing metrics for long-term growth

Few startups can secure long-term growth without repeated injections of funds as they grow and expand. For the majority of startups, these funds will likely come from venture capitalists. Venture capital investment in startups has grown significantly over the past decade from just over $50 billion in 2013 to more than $240 billion in 2022. 2021 set a new record with venture capitalists backing startups with $345 billion.

So, how can startups use marketing metrics to convince potential investors that they are worth the risk and take a share of those funds?

At this stage, a captivating idea or even product-market fit is no longer enough. Instead, investors will be looking for some of the same numbers that can be used to assess fully-fledged businesses:

Customer acquisition cost
Conversion rates
Customer retention

Once your startup has started growing its user base, potential investors will want to know how much it costs to acquire more users or customers. Most investors would expect the initial customer acquisition cost (CAC) to be high and drop somewhat as the brand gains traction.

Education technology startup Blinkist is one example of a company that managed to attract additional funding by demonstrating to investors that it had both an established user base and a growing amount of content that users wanted. These metrics helped the company secure nearly $35 million from two venture capitalists.

CAC is directly related to the startup’s conversion rates. Remember the sales funnel mentioned above. Initial conversion rates tend to sit somewhere in the middle of the funnel as the startup changes sales leads into initial purchases. The higher a company’s conversion rate is, the lower the CAC will be per customer.

High conversion rates are also a good starting point for excellent customer retention. Ideally, startups want to turn one-term customers into long-term users or subscribers. Retaining customers is generally more cost-effective than acquiring new customers. In addition, long-term customers are more likely to develop into brand ambassadors who will contribute to the growth of the startup and inspire confidence from investors.

Balancing essentials and growth

Essential marketing metrics and a focus on growth go hand-in-hand when it comes to securing startup success. Depending on the stage of development of a company, marketing teams will tend to emphasize one over the other.

Early-stage startups generally need to focus more on essentials, while those going through their second or third funding round might need to spend more time evaluating growth metrics. That is not to say that there is never a situation in which a relatively established startup would not focus on essentials. In fact, without keeping track of marketing ROI, growth numbers become a lot less meaningful.

Overall, startups need to look for a balance between measuring growth and essentials that suit the individual business. Leadership teams need to be ready to adapt and iterate the metrics they consider in order to receive actionable insights that drive the company forward and keep investors interested.

Conclusion

Marketing metrics are critical for assessing the health and the potential of a startup. Focusing on essentials initially and prioritizing growth metrics later helps startup founders and their teams develop successful products and attract the continued investment they need to build the business.

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