4 KPIs for tech businesses to monitor
With so much competition in the tech industry, it’s important to monitor the progress of your business closely. Have a look at our core KPIs for running your tech company so you know your business is on the right path.
1. Customer acquisition cost (CAC): This metric measures how much money your business needs to spend on your outgoings. This includes sales, expenses, and marketing. If most of your incoming finances are making their way into your account and going straight back out again, there’s something amiss. This metric links really well with Lifetime Value (below) as you can really get into the value of your clients and cashflow.
2. Lifetime value (LTV): This measures the value of each customer to your business over a given time period. If you can implement this KPI alongside CAC above, you’ll be confident as to how you should be dealing with your customers. If you’re experiencing small values, think about how you could bulk up your services or products by upselling and cross-selling.
3. Burn rate: This is the negative cashflow of your business. Most applicable for start-ups, this KPI will indicate how quickly you’re burning through your cash. Once you know this, you’ll be able to calculate how much cash your business needs to keep going and to grow.
4. Data gravity: This KPI is a relatively new one. As you’re on the cutting edge of new technology, I’m sure you’ve come across it before. It’s basically the idea that as businesses migrate to the cloud, data that remains outside of the cloud starts to gravitate to applications running in the cloud. If you have all of your data in one place, you’ll save on time and cash.
Have a look through our KPI Library for more metrics and how to calculate them.
Find out more about CAC here.
Find out more about LTV here.
Forecast your burn rate.
Find out more about ‘data gravity’, coined by Dave McCrory.