Growth hacking can fuel rapid expansion, but how do you know if your efforts are working? The key lies in meticulous measurement. Let's explore the metrics you should be tracking to evaluate the success of your growth hacking initiatives effectively.
KPI 1: Customer Acquisition Cost (CAC)
Example: An e-commerce site
If you spend $1,000 on a social media ad campaign that acquires 50 new customers, your CAC would be $20.
Keep an eye on CAC in relation to the value each customer brings (Customer Lifetime Value or LTV). A lower CAC or a higher LTV is generally better.
KPI 2: Customer Retention Rate
Example: A subscription service
If you start with 100 customers and retain 90 of them after a month, your customer retention rate is 90%.
Implement strategies like customer loyalty programs or personalized offers to improve retention.
KPI 3: Conversion Rate
Example: A SaaS platform
If 2,000 visitors come to your landing page and 200 sign up for the service, your conversion rate is 10%.
Use A/B testing to optimize various elements like headlines, CTAs, or page layouts to improve the conversion rate.
KPI 4: Net Promoter Score (NPS)
Example: A Mobile App
After implementing a feedback system, you find that 70% of your users would recommend your app.
Use the feedback to make improvements. High NPS can lead to organic growth through word-of-mouth.
KPI 5: Monthly Recurring Revenue (MRR)
Example: A Streaming Service
If you have 1,000 subscribers each paying $10/month, your MRR is $10,000.
Focus on increasing the MRR either by acquiring more customers or upselling/cross-selling to existing ones.
Tools to track these metrics
- Get started: Collect everything in a Google Spreadsheet. Manual data gathering has a benefit of really understand the numbers.
- Google Analytics for tracking website traffic, user behavior, and conversions.
- Mixpanel for tracking user interactions within your app or service.
- Customer Relationship Management (CRM) software for tracking CAC and CLV.
Measuring the success of your growth hacking initiatives is not just important—it's imperative for sustained growth. By focusing on these key performance indicators and continuously optimizing, you can ensure that your growth hacking efforts are fruitful.
Read more: Measure What Matters