Growth analytics includes evaluating the data you acquire with specific tools. Businesses may expand in a variety of ways, including income, client base, and conversion rate. To assess your own performance, you must first comprehend the information coming in about your consumers and your firm as a whole.
Read the blog to learn about numerous growth measures and how to use them to track your company's success.
What are Growth Metrics?
Your company's important measurements are called growth metrics. Progress metrics, like other metrics, are composed of objective numerical data, however they are especially employed in analytics to track your company's growth through time. They are used to compute growth KPIs, which examine how your firm compares to your business objectives.
The growth of your firm in the past should assist you create accurate projections about future growth and give you a notion of what looks healthy for you.
Growth Measures are used to investigate a company's past growth (and hopefully provide clues for the future). Different indicators may be employed to better properly depict a company's past growth depending on the current circumstances.
YCharts provides growth measures that enable you to study quarterly growth (YoY, QoQ) as well as yearly growth metrics ranging from annual YoY to three, five, and ten year growth.
Because each organization and sector is unique, determining which growth measures provide an accurate picture is crucial. Using a quarterly statistic to compare a company's growth after a recent unusual one-time cost is inadequate due diligence.
Comparing a firm and its rivals across three-year growth indicators, on the other hand, makes a lot of sense. Growth metrics are, in some ways, your company's key performance indicators. Growth metrics include all of the crucial information your company monitors, such as conversion rates, product growth metrics, and email click-through rates.
Rather than having a separate growth analysis for each of these figures, growth metrics aggregate them all in one place, providing you with a holistic view of your company's success (or the losses it is shouldering).
The main advantage of having growth analytics in place is that you can make educated decisions based on previous growth trends to better guide future growth, reallocate resources, employ staff, and plan operations properly.
Also Read | Examples of Business Metrics
Why are Growth Metrics Important?
Consistently assessing your company's development is a great approach to avoid problems with your bottom line. Knowing you're profitable is great, but identifying trends in your customer base by analyzing client behavior can help you remain ahead of your competition.
Analyzing Growth Metrics data helps you better grasp what the future holds for your business. Your teams may use the data you collect to make data-driven decisions that will enhance the quality of your services, market to the proper audiences, raise customer happiness, and increase customer retention.
Monitor Revenue Growth
Monitoring revenue gains and drops for various goods and services enables you to determine which sections of your organization generate the most cash. If a product or service costs more than it generates in returns, you may adjust or remove it and concentrate your efforts on areas that have a positive influence on your bottom line.
Determine Which Channels Possess Growth Potential
Growth metrics not only shed light on successful products and services, but they also point you where and to whom you should advertise. Nothing beats learning that you have a mostly untapped market for your expanding firm.
Monitoring your customers' information with tools like Kissmetrics' person profiles allows you to gain insights into their demographics and develop new marketing techniques to help your company grow.
Locate Weak Links
Finding parts of your organization that prevent development is just as vital as discovering areas where growth may thrive. If you discover that you're getting negative feedback because your team is unable to keep up with service requests for your products, it's a sign that your customer service department is impeding your growth.
They might be the reason you don't have as many returning customers or as many new consumers as you'd want. This gives a concrete goal: recruit more team members to strengthen the weak link.
Determine the Health of Your Company
A healthy business is one that is growing. Growth metrics allow you to determine whether or not your company is expanding and by how much over a certain time period. If your firm is developing at a slower rate than its rivals, it's an indication that something has to be changed.
Stagnant or decreasing businesses are generally an indication that trouble is on the way, so you must remain on top of growth measures to learn about issues as they develop.
Growth metrics may be used to calculate ROI and differentiate across campaigns. Kissmetrics enables campaign tracking by delivering various URLs for social media postings and drip email campaigns. By monitoring your ROI, you may discover which paths contribute to company growth and avoid wasting time on other marketing activities.
Also Read | Capital Investment
Growth Metrics to Track
The important growth measures listed below provide a clear picture of your company's success. Let's have a look at some of the growth metrics to track :
Top 10 Growth Metrics to be Tracked
Rate of Activation
Every firm has action milestones that help it determine how likely a consumer is to return to it. When a customer reaches one of these milestones, the company may identify him so that marketing teams can approach him based on the stage of interaction he is in.
The activation rate is a quantifiable metric that indicates a corporation how many of the total number of people accomplished a specific milestone or took a critical action with the corporate app, landing page, website, and so on. The activation rate may be computed mathematically as follows:
(Consumers who perform a milestone activity / Total consumers who signed up) × 100 = Activation Rate
Annual Revenue Return
This is an important growth indicator that informs you how much income an investment created over a year in relation to the money spent in it. In simpler terms, it is your ROI determined for a certain investment over a one-year period.
The following formula is used to compute the rate of yearly returning revenue:
Annual Return on Investment = [(Present Total Value of Investment - Initial Total Value of Investment) / Initial Total Value of Investment] x 100
Recurring Monthly Revenue (MRR)
Monthly recurring revenue (MRR), like Annual Revenue Rate, represents the estimated income a company will get in a month based on its recurring revenue (i.e. monthly subscriptions or memberships).
MRR, particularly for subscription-based services, assists organizations in keeping a pulse on the health of their business and how they're maintaining or upselling clients month after month (helping spot patterns when it comes to acquisition, churn, or even lifetime value).
Monthly recurring = (Revenue averaged per customer x total number of accounts)
Cost of Customer Acquisition (CAC)
Customer acquisition cost (CAC) provides an answer to the question, "How much money does it take to bring in a new customer?" This indicator is computed by dividing the cost of marketing and sales activities by the number of new customers obtained over a certain time period.
Customer acquisition expenses assist firms in determining the effectiveness of their marketing and sales initiatives and how to improve them. Growth marketers may lower the cost of acquisition by experimenting with which channels are utilized to engage clients or which personas are targeted (to name a few examples).
Revenue Per User on Average
This growth indicator assists in quantifying the profits earned by a company for each client who uses its products or services over a set period of time. Depending on the industry in which your company works, it is also known as Average Revenue Per Unit.
The average revenue per user is stated mathematically as follows:
Average revenue per user = (total income earned during a specified time period divided by total number of users during that time period)
Revenue churn is a growth statistic that reveals the revenue lost due to missed subscription renewals. This growth statistic accounts for the revenue loss from subscription dollars that were due for renewal but did not occur.
The mathematical relationship used to calculate revenue churn for a specific time period is dependent on the period's monthly recurring revenue (MRR).
Rate of Retention
The percentage of clients that continue to do business with your brand after a certain period of time is referred to as the retention rate (e.g. maintaining their subscriptions, making repeat purchases, and so on).
One of the ultimate growth methods is to increase client retention. To begin, researching why consumers continue to do business with your brand may help businesses discover their competitive differentiators.
Second, keeping a current client is substantially cheaper than acquiring a new one (5-25x less expensive). In fact, a big portion of growth is about plugging these funnel leaks.
Rate of Repeat Purchases
The repeat purchase rate is a measure primarily used by e-commerce firms to assess the percentage of consumers that buy from your company more than once.
Repeat consumers are more loyal to the company and spend more money over time (one research indicated that customers paid 67 percent more each order after shopping with a clothing company for more than 30 months), and they are also more inclined to suggest friends or coworkers.
As a result, promoting repeat buyers is a wise (and required) growth strategy linked to growing client lifetime value and continuous retention rates.
Net Promoter Score (NPS)
Net Promoter Scores (NPS) are calculated by asking consumers to rate how likely they are to suggest your product or service on a scale of 1 to 10. Customers are classified as promoters (very likely to suggest your brand), critics (unlikely to make a recommendation), or passives based on their rating (i.e. neutral).
Using this numerical score to quantify how customers feel about your brand (together with their textual input) provides businesses with vital information into what they're doing well and where they may improve.
Being able to leverage on consumers' word-of-mouth recommendations and referrals is also a cost-effective and powerful growth approach (in fact, studies indicate that friends and family are far more important than commercials or marketing in driving brand adoption).
Rate of Churn
The churn rate, like revenue churn, is a growth statistic that helps a company identify the decline in subscribers. This growth measure reflects the percentage of canceled or stopped memberships. The turnover rate growth measure is calculated using the following formula:
Churn rate = [(Users at the start of a time period – Users at the end of the same time period) / Users at the start of a time period] 100 times
To evaluate how your firm is doing today and in the future, you must have a thorough grasp of growth indicators. It may not be as accurate as a crystal ball, but knowing where you have potential for development and what to expect in your expanding company will allow you to evaluate the effectiveness of your strategy and launch new projects with confidence.
A company's growth metrics not only shed light on the performance and efficiency connected with processes, but they also assist decision-makers in identifying problem areas and taking corrective action. The insights that growth metrics bring into real data are critical nowadays to assisting a firm in making the best use of its resources.