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Top 10 KPIs for your Tech Startup

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Key Performance Indicators (KPIs) are data points that measure your company’s performance. They help you answer specific business questions such as:

  • Is the business financially viable?
  • What is working well and what needs to be improved?
  • What is driving customers to purchase your products?
  • How can the company improve its profitability?

Let’s look at 10 KPIs that are useful to track for ecommerce, marketplace and SaaS based businesses.

Monthly Active Users (MAU): This demonstrates how many users visit your platform, website or service every month and are “active”. That could mean they engage with the blog, click on the pricing page or interact with the contact form. This is done by the number of users that visit your platform in a certain time period (albeit monthly in this case). For an ecommerce company like Drover, a peer to peer marketplace for leasing cars to drivers, seeing the MAU increasing means it is attracting new users to the platform.

Conversion Rate (CR): According to BigCommerce, even if you are doing everything right –  you’d only expect to make a sale only 2% of the time. Clearly there are ecommerce companies that exceed that, however. Conversion rate can be calculated easily, as per the below:

Conversion Rate: # of sales / # of visitors

Provider to Consumer Ratio: This is important when tracking the growth of a marketplace business. This is defined as the number of customers a single provider on the supply side of the marketplace can serve. This varies radically across different marketplace businesses, according to Phil hu: AirBnB 70:1, Uber 50:1 and eBay 5:1.

Average Order Value (AoV): AoV is crucial to determine how much revenue you can generate over time. This describes the average size of an order on your platform. Naturally, the higher the average order size the better.

Customer Acquisition Cost (CAC): This is a single most important metric that runs across most business models. The amount it costs to acquire a new customer. Ideally, your CAC should be zero – that is every new customer is referred by another potential customer or customer base grows organically. However, that is rarely possible. To bring new customers onto the platform, you’ll have to spend some money. It is really important to track this over time, and see by how much you’re able to decrease it.

Customer Lifetime Value (CLV): This represents the total amount of revenue that you expect to get from each customer. To calculate the CLV, it depends on how long the customer is retained on the platform, how many repeat purchases does the customer make and what is the average order size. To get a general idea, CLV can be calculated based on the average order value multiplied by the average number of repeat purchases per customer.

Churn Rate: This metric measures the number of customers your platform loses over a given period of time (daily/monthly/annually). Churn rate is critical for SaaS based businesses, where customers pay subscription recurring payments. If the churn rate is high, clearly it means the customer base is unhappy.

Monthly Revenue Rate (MRR): MRR describes the predictable revenue stream of your platform. To calculate MRR, you need to understand the total number of customers per month, and know how much revenue does each customer creates, as per the below:

MRR = Amount of revenue per customer * Total # of customers

Contribution Margin (CM): Contribution margin is the margin that is left after you deduct all variable costs of producing the product or service from the total revenues. A common mistake entrepreneurs make is lumping fixed costs of building a product or service and variable costs together and deduct that from the revenue to understand profit. However, fixed costs remain permanent in the business, no matter how many products or service you produce, it is the variable costs (such marketing spend) that you can change in your business. Some of the most common ways to use the CM is to understand which products or services to continue building and which ones to kill or how to price the products or services.

Net Promoter Score (NPS): This is a great metric to understand if customers are likely to refer you to other users such that your platform can grow organically. To calculate NPS you must ask a specific question:

How likely is it that you would recommend [brand] to a friend of colleague?

And ask the user to answer with a number between 0-10. You can read more information about tracking NPS in this guide here.

Customers that give you a 6 or below are Detractors, a score of 7 or 8 are called Passives, and a 9 or 10 are Promoters.

To calculate your Net Promoter Score, detract the percentage of Detractors from the percentage of Promoters. It is that simple. So, if 50% of respondents were Promoters and 10% were Detractors, your Net Promoter is a score of 40.

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About the Author

This article was written by  of the  Path Forward. The Path Forward was developed by Forward Partners, a VC platform that invests in the best ideas and brilliant people. Forward Partners devised The Path Forward to help their founders validate their ideas, build a product, achieve traction, hire a team and raise follow on funding all in the space of 12 months. The Path Forward is a fantastic startup framework for you to utilise as an early stage founder or operator. The framework clearly defines startup creation as being comprised of three steps. The first step of this framework involves understanding customer’s needs.

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Benedict Heng, Founder of Mr. Farmer

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Benedict Heng is bringing back the ‘kampong’ days of having the Ho Liao (good ingredients) for Ho Jiak (good tasting) food.

What’s your story?
I’m Ben from Mr. Farmer. Mr. Farmer is an online grocer dedicated to supplying the freshest produce to our customers. We believe in sustainable and ethical farming. Since a young age, I have always been an avid food lover (especially meats), developing a strong interest in all things delicious. That is why I ventured into the F&B industry, working as a junior cook for 3 years.

Midway through my career, I made a move to the finance industry to pursue monetary rewards. I dove into high-risk investments and I made lots of money from these investments. However, the good fortune did not last long and all these came crashing down when I suffered a tremendous loss. This coincided with the time that I had just started my own family and it was a huge blow to me both materially and mentally. It was this crash that made me realize that this life wasn’t for me. I went on a hiatus and eventually, it was only through the strong support from my family that I managed to tide over this tough episode.

I went back to help the family business and this was how Mr Farmer came about. My family has been in the food industry for many decades and one thing they noticed from years of experience is that sustainable farming practices are not as developed as in Europe. This is why through Mr Farmer, we hope that we can provide the best quality products to families out there who want the best ingredients for their loved ones.

What excites you most about your industry?
Delicious and wholesome food excites me. I believe food is a critical component of life and it brings people together. The opportunity to serve the community with fresh produce for a healthy life, that brings me joy.

I feel that there is still so much more we can do to improve the quality of food and bring it to the masses. One of the key components of ensuring greater quality of food is to support ethical and sustainable farming. Due to commercialization and urbanization, most farming practices these days are no longer the way they were in the old “kampong” times. Shortcuts are taken, standards are compromised, all in the name of profit. At Mr. Farmer, profit is important too but we want to focus on the concept of One Welfare – sustainable farming directly impacts our health. Our vision is to bring back the ‘kampong’ days of having the Ho Liao (good ingredients) for Ho Jiak (good tasting) food.

What’s your connection to Asia?
I was born and raised in Singapore. I call Singapore my home as it’s where my family and close friends are. I also travel frequently to Malaysia and APAC for work.

Favourite city in Asia for business and why?
It’s definitely Singapore. There is just so much this tiny city can offer! Singapore has been globally recognized for its top-notch business environment providing its residents with developed infrastructure, political stability and excellent connectivity. These factors have given us an outstanding support system for businesses to strive.

What’s the best piece of advice you ever received?
Surround yourself with people that inspire you, challenge you to rise higher, make you better and, keep them in your life.

Who inspires you?
I draw inspiration from my uncle, who is the head of both the family and business. He takes care of our family matters at home and manages hundreds of employees at work. Handling both the family and business side of things can be tricky, but he has shown me that success can be sustainable and done with a conscience. His guiding philosophy of handling business and family is simply, to have a big heart.

What have you just learnt recently that blew you away?
Even just one day of separation from the day the meat is slaughtered, makes a world of difference to its flavour.

If you had your time again, what would you do differently?
I have come to learn that awareness is the beginning of everything. If I had my time again, I would have probably spent more time figuring out who I truly am and with that self-awareness, begun to lead my life with more purpose and meaning.

How do you unwind?
I like to spend my free time sipping white coffee at my favourite coffee place. I enjoy taking in the surrounding sights and letting my mind wander freely. It allows me to unwind and gain clarity at the same time. It also helps me organize my thoughts to prepare for the week ahead.

Favourite Asian destination for relaxation? Why?
It would be Bangkok as the people there are genuinely friendly and hospitable. They say people are what defines the city and I couldn’t agree more with this. I also enjoy the ‘laid back’ vibe of Bangkok. Not to mention Bangkok has all the good food and awesome shopping choices too!

Everyone in business should read this book:
“Spin selling” by Neil Reckham. It’s an amazing book that teaches you a process designed to help you successfully sell your products and services to business buyers.

Shameless plug for your business:
We at Mr. Farmer have the best tasting meats in Singapore, do a blind test and you will know why it’s Michelin chefs’ preferred choice. Not only are we very confident about the taste, we are also proud to say that all our products are chemical, hormone and antibiotic free. We also focus a lot on supporting ethical and sustainable farming practices believing in the ‘One Welfare’ concept. Do check us out if you enjoy good quality food like us!

How can people connect with you?
[email protected]

This interview is part of the ‘Callum Connect’ series of more than 500 interviews

Callum Laing is an entrepreneur and investor based in Singapore. He has previously started,
built and sold half a dozen businesses and is now a Partner at Unity-Group Private Equity and Co-Founder of The Marketing Group PLC. He is the author two best selling books ‘Progressive Partnerships’ and ‘Agglomerate’.

Connect with Callum here:
twitter.com/laingcallum
linkedin.com/in/callumlaing
Download free copies of his books here: www.callumlaing.com

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Zac Chua, Founder & CEO of The Kettle Gourmet

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Zac Chua’s popcorn business validated itself straight away and fast tracked him to the startup world. Zac now employs 11 people and shifts 500 bags of popcorn daily.

What’s your story?
It’s a crazy one. It was an accidental startup. If you think about it, no university graduate would ever dream of becoming a popcorn seller. We crashed our first tech event to validate our idea and it took off from there. I bought a logo for $7 from a designers marketplace, printed some cheap name cards, and built a 1 page landing page. Sales started pouring in and eventually, we were serving B2B clients (corporate pantries) and we have never looked back. Today we move about 500 bags daily, we have 11 employees and we are growing. Talk about a validation that worked in our favour.

What excites you most about your industry?
It’s food! Everybody loves food! In Singapore the F&B scene is brutally competitive and it spurs me on to fight and compete for market share and to prove to myself that I can do it. It keeps me going and I won’t stop until we become the market leader.

What’s your connection to Asia?
I was born in Singapore, and have traveled to most of Southeast Asia.

Favourite city in Asia for business and why?
Singapore! Even though Singapore has a high cost of living, the Government is actually very supportive of startups. They provide grants for us to tap into, and the technological infrastructure makes it possible for us to compete on a global scale. I believe if you can succeed in your business in Singapore, you can succeed in most of Southeast Asia.

What’s the best piece of advice you ever received?
You only need to be right once, and the rest is history.

Who inspires you?
My father, who was a VC. In fact he was the one who gave me the best piece of advice which I shared above. Having one successful exit, he showed me that it’s okay to fail a million times – all it takes is just one time for you to win in business and in life.

What have you just learnt recently that blew you away?
The power of compounding.

  • Mary and John are the same age.
  • Mary saves $2k annually from the age of 19-25 – so she puts $14k into her portfolio
  • John saves $2k annually from the age of 26-65 – so he puts $80k into his portfolio, but 7 years after Mary.
  • If both are able to generate 10% per annum, who would have more at age 65?
  • John of course! But how much more?
  • Mary will have $944,641 whilst John will have $973,704
  • Think about it! Mary puts in only $14k but John delays for 7 years and puts in $80k.

CRAZY RIGHT!?!?

If you had your time again, what would you do differently?
Nothing, my mistakes taught me how to become a better me. But if I really must choose, I’d say take more time to find the right business partner.

How do you unwind?
Poker, Mahjong and Dota 2.

Favourite Asian destination for relaxation? Why?
Vietnam! Things are cheap, people are warm and friendly, and their coffee fills up my life. I would love to retire there if possible.

Everyone in business should read this book:
The richest man in Babylon

Shameless plug for your business:
We don’t need a plug. Just try our competitors and you’ll understand why!

How can people connect with you?
Facebook: https://www.facebook.com/chuazongyou
LinkedIn: https://www.linkedin.com/in/zacchua

This interview is part of the ‘Callum Connect’ series of more than 500 interviews

Callum Laing is an entrepreneur and investor based in Singapore. He has previously started,
built and sold half a dozen businesses and is now a Partner at Unity-Group Private Equity and Co-Founder of The Marketing Group PLC. He is the author two best selling books ‘Progressive Partnerships’ and ‘Agglomerate’.

Connect with Callum here:
twitter.com/laingcallum
linkedin.com/in/callumlaing
Download free copies of his books here: www.callumlaing.com

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