Success is something we all strive for, but how can we define it on our own terms, especially for early-stage startups? What does early success look like?
There are a few different metrics you can use to determine if your company is growing as you’d hoped and having a sleek PR and Comms strategy can help you get there, as it can assist you in building your brand and raising awareness around it on a larger scale.
This can be beneficial not only from a public relations point of view as the exposure will help you get new partnerships and interest from investors, who find out about new opportunities by following the industry news.
To get started, you should pay attention to your FINANCIAL METRICS:
Burn Rate: This is the negative cash flow of a company. It shows how quickly a startup is spending money. This key metric is essential for determining how much cash the company needs to keep operating and growing.
It’s a great metric to use when trying to increase funds as it signals to existing investors how quickly their teams need to be fundraising and the level of risk the company is facing. It also signals to potential new investors how quickly you need to raise (i.e. you have less leverage if you’re in a rush) and how much cash you’ll need if they fund you.
Gross Margins: Your gross margins measure your operating profitability. Both the level and the trend are important. You should know what kind of gross margin is typical for your industry so you have a sense of where you stack up. Gross margins will tell you how effective your management, sales, and customer teams are at driving the business, what stage of the curve your business is in, what operating levers you can use to drive growth, and how close you are to inflexion points.
Revenue Growth Rate: Measuring revenue alone is not an effective measure for early-stage startups as most early-stage tech startups won’t be making much revenue. But with a revenue growth rate, it measures the month-over-month percentage increase in revenue. It’s one of the most common and important startup metrics as it provides a solid indicator of how quickly your startup is growing.
You should also look carefully at your CUSTOMER METRICS since your customers can be the most important metric to track. Customer happiness, engagement and onboarding are very important to the success of your business.
Customer Acquisition Cost (CAC): Do you know how much it costs you to attract each customer? That’s what your CAC will show you. It’s a good way to monitor how efficient your sales process and sales team are. If the proportion of spend to impact is not improving over time, you need to make some changes.
Knowing these numbers can tell you a lot about where you are with your value proposition, messaging and conversion pipeline. Seeing potential customers/users not converting will tell you a lot about your business and the needs of your audience. Don’t just listen to your acquired users or customers, listen to those who have told you no, find out why and what you need to improve on. This can be the key to your success!
Customer Churn Rate: How loyal is your customer base? Your churn rate shows how well you hold onto customers. The absolute value is important, but again, so is the trend. It should descend over time. If it suddenly spikes or plateaus at a high level, you need to figure out why. The numbers will be your guide.
But how does all of this tie-up with your PR and Comms strategy? Well, for one thing analysing these figures is a great way to see if the current strategy you have in place is working, as PR and Comms are the main drivers of strengthening your credibility not only with the media but with the general public too, which can help bring new business to you.
Another metric you should keep your eye on is your social media channels. An increase in followers and/or likes is an important thing to pay attention to. The power lies in the quality of those followers, their relevance to your market, and their willingness to engage and to ultimately buy what you are selling.
Provided you have a good strategy in place, your social following should grow organically over time. For fast growth, consider investing budget into paid social promotion of content. This will boost your reach but comes at a price.
BY TOTO OBI, JUNIOR AT CEW COMMUNICATIONS.