There are two main types of KPIs.
1. Lagging Indicators
These measure past performance, revenue, and customer activity.
2. Leading Indicators
By analyzing both, you better understand your biz, ad how to scale it:
1. Annual Contract Value (ACV)
How much is each contract worth per year?
Total monthly contract x 12 = ACV
Ex:
$1,500 x 12 = $18,000 ACV
2. Annual Recurring Revenue (ARR)
Identifies how much recurring $ your biz makes per year.
(Overall subscription cost per year + Recurring revenue from add-ons or upgrades) - Revenue lost from cancellations = ARR
Ex:
($1M/yr Subscriptions + $200k Recurring upsells) - $300k Lost to churn = $900k ARR
3. Average Revenue Per User (ARPU)
Quantifies the $ value of each customer.
Total revenue / Average # of users = ARPU
Ex:
$1M/yr Revenue / 1,000 Users = $1,000 ARPU
4. Customer Acquisition Cost (CAC)
Identifies the total cost to get a new customer.
(Cost of sales + Cost of marketing) / New customers acquired = CAC
Ex:
($500k Sales commissions + $500k Ad spend) / 10,000 Customers = $100 CAC
5. Customer Effort Score (CES)
Measures how difficult it is—
And how long it takes for a customer to perform a certain action with your biz.
To determine this, ask your customers to answer these questions on a scale of 1-10:
“How much effort did you put forth to handle your request?”
“The organization made it easy for me to handle my issue.”
6. Customer Retention Cost (CRC)
Quantifies your total cost to keep your customers happy & paying you.
(Total cost of customer success + retention activities ) / number of active customers = CRC
Ex:
($750k customer satisfaction costs + $250k retention costs) / 5,000 customers = $200 CRC
7. Customer Retention Rate (CRR)
Measures how many customers you keep over a period of time.
1 - (Customer lost in the period/ Customer at start of the period) = CRR
Ex:
1 - (1,000 Customers lost / 5,000 Customers at start) = 80% CRR
8. Customer Satisfaction Score (CSAT)
What % of your customers are happy w/ your service?
(Number of satisfied customers / Total number of responders) * 100 = CSAT
Ex:
(1,275 Satisfied customers / 2,500 Responses) = 51% CSAT
9. Customer Churn Rate (CCR)
Calculates what % of your customers leave your biz.
Total number of churned customers / total number of all customers = CCR
Ex:
2k Churned customers / 5k Total customers = 40% CCR
10. First Contact Resolution Rate (FCRR)
Number of support requests solved on the first request.
Total support requests resolved on first contact / Total support requests = FCRR
Ex:
80 Resolved on first contact / 100 Support requests = 80% FCRR
11. Gross Revenue Retention (GRR)
Determines the % of recurring revenue kept over time.
(Churn recurring revenue + Downgrade recurring revenue) / Starting recurring revenue = GRR
Ex:
($300k Churned + $200k Downgraded) / $1M Recurring = 50% GRR
80 Resolved on first contact / 100 Support requests = 80% FCRR
12. Customer Lifetime Value (LTV or CLV)
Calculates how much $ each customer is worth.
Customer value * Average customer lifespan = LTV
Ex:
$10k MRR * 3 Month avg. customer lifespan = $30k LTV
13. Average Purchase Value (APV)
Average $ each customer spends.
Total revenue / Number of orders = APV
Ex:
$1M Revenue / 2k Orders = $500 APV
14. Average Customer Lifespan (ACL)
How long your avg. customer keeps buying from your biz.
1 (months or years) / Churn rate = ACL
Ex:
1 Year / 40% Churn rate = 2.5 Year ACL
15. Monthly Recurring Revenue (MRR)
(Total subscription revenue/mo + Recurring revenue from add-ons or upgrades) - Revenue lost from cancellations = MRR
Ex:
($100k/mo Subscriptions + $40k/mo Upsells) - $20k Lost from churn = $120k MRR
16. Net Dollar Retention (NDR)
Calculates how much $ you keep each month after all growth and churn.
(Starting MRR + expansion – contraction – customer churn) / Starting MRR = NDR
Ex:
($100k MRR + $20k MRR - $15k MRR - $15k Churn) / $100k MRR = 90% NDR
That's it for now!
How many of these KPIs did you know?
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