“What gets measured gets done.” 

A data-driven approach can help you make accurate and timely business decisions to meet market demands and improve cost-efficiency.

However, as a founder of a small business or startup, you’re juggling many things. You need to use your time and resources productively by focusing on the right metrics so you can use data to help you implement improvements that matter.

Here’s what you need to know about using key performance indicators (KPIs) to drive business success:

What Are KPIs and How To Apply Them To Your Business

KPIs are measurable values that demonstrate how effectively your company is in achieving specific business objectives.

It’s important to define and measure KPIs associated with your business goals and milestones so they can be used to inform actions that will lead to positive outcomes. 

Think of them like this: If you have a critical sales milestone your company needs to meet by the end of the year, KPIs should deliver incremental evidence that you’re either headed in the right direction, or you’re not. 

KPIs can (and should) be used as a communication tool to align everyone in the organization so employees are empowered to take initiatives in achieving business goals.

As such, KPIs should be clear, relevant, and actionable, so they can be communicated succinctly to the entire organization.

How To Successfully Use KPIs In Your Business

The first step is to formulate a KPI strategy by selecting the right metrics to track. Otherwise, you could be wasting resources chasing numbers that aren’t relevant to your business.

  • Identify KPIs that reflect your organizational objectives and consider how you can achieve them. 
  • Get input from analysts, department heads, managers, and other team members that need to act on the information. 
  • Use current analytics to identify which business processes should be measured and who the stakeholders are.

The KPIs you need to track depends on your industry. Each department or role will need to focus on different KPIs based on specific objectives. 

For example, leadership can use high-level KPIs to measure the overall performance of the company, and managers can use granular KPIs to gauge the effectiveness of processes, such as sales, marketing, or procurement.

Here’s how to identify the right KPIs to track:

  • The metrics should relate to specific objectives for business success.
  • Managers should be able to form an actionable response based on the information.
  • The measurable data points should fit into your overall business strategy.
  • The metrics should help you identify areas for improvement.

KPIs Every Founder Should Track

While the right metrics will depend on your business objectives and specific circumstances, there are some basic KPIs you should keep an eye on:

Startup KPIs

Many startups focus on growth (instead of profits) and often need to track KPIs that may be different from those used by established businesses:

    • Burn rate: indicates the company’s negative cash flow or how quickly it’s spending money. This metric helps determine how much cash you need for operation and expansion.
    • Activation rate: measures how many visitors are engaging with your website or app. Depending on the nature of your business, it could be the number of clicks, time on the website, pages viewed, downloads, email/blog subscription, or trial signup.
    • Daily active users to monthly active users ratio: reflects how often users engage with your product, i.e., its stickiness.
    • Customer churn rate: shows the percentage of customers lost in a given period (e.g., canceling their subscriptions or not making a repeat purchase.)
    • Revenue growth rate: measures the month-over-month percentage increase in revenue and is the most common and important metric for startups.

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Due to the nature of the subscription model, SaaS companies need to focus on certain metrics to ensure profitability.

    • Customer lifetime value (LTV): the longer a customer stays with your business, the higher the LTV and the more profitable the relationship is.
    • Monthly recurring revenue (MRR): an indicator of the health of the company, it shows how successful your business is at growing its customer base and retaining customers.
    • Net Promoter Score (NPS): measures customer loyalty and satisfaction, which is essential for customer retention and referral marketing.
    • Customer lifetime value to customer acquisition cost ratio (CLV: CAC): an important metric that indicates the profitability of the subscription model, it measures the relationship between the lifetime value of a customer and the cost of acquiring that customer. 

Marketing KPIs

Marketing KPIs are often good indicators of how effective you are in attracting high-quality prospects and therefore how many sales you’re making down the line. 

  • Cost per conversion or acquisition: represents the total cost paid for an advertisement in relation to its effectiveness in generating a conversion. 
  • Marketing expenses and traffic: shows how marketing expenses affect website traffic.
  • Conversion funnel: shows how prospects advance through the marketing funnel in a specific duration.
  • ROI: measures the effectiveness of your marketing initiatives by comparing conversion values to costs.

Sales KPIs

Sales KPIs help your sales team stay vigilant and motivated in achieving sales goals, which is the key to generating revenue and maintaining healthy cash flow.

  • Revenue and wins by type: compare revenue and wins among existing and new businesses.
  • Open opportunities by stage: monitor the number of leads you have at each stage of the sales cycle and how you can best allocate resources to pursue them.
  • Customer acquisition cost (CAC): find out how much it takes to acquire a customer (e.g., over the last 30 days)—you’re profitable if the revenue from each customer is higher than that of the CAC.
  • Sales growth: a core part of any business strategy, it helps you set realistic revenue projection and objectives.
  • Sales conversion rate: shows how well your sales team is in converting prospects into new customers.

As a business owner, it’s critical to keep your finger on the proverbial sales pulse. There are numerous sales KPI templates for anything from overall sales growth to more specific metrics like sales by campaign or opportunity to win ratio. 

Employee KPIs

While conversion and customer retention KPIs are crucial to your business success, employee engagement can’t be taken lightly. Employee satisfaction, engagement, and motivation are all tied to productivity and retention. 

  • Employee engagement: measures the output compared to cost for each employee. This is also tied to higher customer ratings and less turnover. 
  • Internal Net Promoter Score: how loyal and satisfied employees are with their work environment. One way to measure this is by internal surveys asking questions like, “How likely is it that you would recommend working at our company to a friend or colleague?”
  • Supervisor satisfaction: how satisfied employees are with their boss. 1 out of 2 professionals reported leaving a job because of a bad boss. 
  • Goal performance: sets specific performance goals for each employee role and measures the percentage of achievement. If employees are achieving close to 100 percent of the goals then your bar is set too low. A good goal performance percentage for employees to strive for is 60 to 80 percent.

How you motivate different employee types is also important. The “stick and carrot” method works for some people, but the general workforce is increasingly motivated by things like work-life balance. Identify what motivates each employee and try to support that within the workplace to get the optimal productivity and loyalty. 

Customer Support KPIs

It’s 5x more expensive to acquire a new customer than to retain an existing one. Couple that with the fact that businesses can increase profits by 25 to 95 percent% by increasing customer retention by 5 percent%. Monitoring and improving customer support KPIs is one of the most effective ways to grow a business.

  • Customer Satisfaction Score (CSAT): is a measure of your customers’ emotional satisfaction with your product, service or overall business. These scores can come in the form of numbers (1-10), stars, etc. 
  • Net Promoter Score (NPS): NPS measures from 1-10 how likely your customers are to recommend your business to a friend. Their responses put them into three buckets: “promoters (9-10), passives (7-8), or detractors (0-6). Take the percentage of “promoters” minus the percentage of “detractors” and you get your NPS. 
  • First Response Time: measures the speed at which your support team responds to customer questions or complaints. Speed is a top determining factor of customer satisfaction, even if the answer didn’t solve the issue
  • Customer Retention Rate: measures the percentage of customers that have stayed with your business over a specified period of time (annually, monthly, etc.). Customer retention rate = ((Number of customers at the end of the period—Number of new customers acquired during the period) / (Number of customers at the start of period)) X 100. 

The customers’ overall satisfaction with a business, in most cases, can be traced back to how well your support team deals with any issues they have. Keeping a close eye on how well your support team is communicating with customers is also crucial. This can be tracked by using agent scorecards to show how well your support team is handling customer inquiries, and how satisfied customers are with those interactions. 

Are You On Track To Meet Your Business Objectives?

KPI reporting allows you to leverage data analytics and facilitate growth, so it’s important to create a culture that supports KPI monitoring in your company.

After all, KPIs are only as good as how well they’re utilized to generate insights and inspire actions that can lead to positive business outcomes.

Implement the right workflows and technologies to gather and process the data. Make sure that leadership, managers, and stakeholders are reviewing the appropriate reports regularly and considering questions such as:

  • How’s your financial performance when you compare your actuals against your forecasts?
  • Are the assumptions used to plan the goals still valid? 
  • Do the metrics in a particular period indicate a trend or are they outliers?
  • What factors are impacting the KPIs and how can they be fine-tuned to improve results?

KPI reports should be shared with the entire organization frequently. Use a dashboard for KPI presentation so everyone can visualize the data in real-time, foster conversation, and act on the information in a timely manner.

When you review KPIs, look for opportunities to make adjustments so you can increase revenue and lower costs. For example, you may need to reassess the vertical distribution of your sales team to focus on industries with higher returns.

Automate KPI reporting to get the actionable insights in real-time for timely and accurate decision-making. This will also help lower costs and eliminate errors associated with transferring data and generating reports manually.


Measuring the right KPIs can help align employees with your goals for business success and allow them to focus on making improvements that will move your business forward in the right direction. 

It’s important to have streamlined processes in place and empower your teams with the right technologies so you can leverage a data-driven approach to making accurate and impactful business decisions.

AvatarMatt Shealy

Matt Shealy is the President of ChamberofCommerce.com. Chamber specializes in helping small businesses grow their business on the web while facilitating the connectivity between local businesses and more than 7,000 chambers of commerce worldwide.