10 Basic Metrices Every Business Owner Should Know

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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 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

6.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

7.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

8. 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

9.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

10.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


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