10 growth metrics you should be tracking before talking to investors

How do you know that your business is growing? Of course, you can rely on gut feeling or celebrate occasional wins. Or you can simply track key growth metrics.

Growth KPIs (key performance indicators) translate business performance and customer behavior into a clear understanding of whether your revenue and number of customers are growing (at the end of the day, that’s how we typically see if a business expands—more customers spend more money on its products or services).

Yet, don’t jump to the conclusion that growth at all costs is what you need. It’s not. Sustainable growth is what investors put on top nowadays. And they want companies to demonstrate how they grow and, more importantly, how they measure this business growth based on hard numbers rather than wishful thinking (while realistic projections and forecasts remain valid). 

However, tossing some raw data into a spreadsheet won’t impress investors. You must know which growth metrics to track and how to present them to investors so they can see your startup’s health and strategic potential at a glance. The main task here is to transform raw data into a well-structured and data-driven narrative that speaks directly to what investors care about the most: strong evidence of smart, sustainable growth with a clear path to success.

In this article, we’ll speak about what growth metrics are, why you need to care about them, which you should track, and how to measure business growth. Let’s dive in!

What are growth metrics, and why do startups need to track them?

Growth metrics (aka growth analytics) are quantitative measurements of how fast a company grows over a certain period of time. More simply, these are the numbers that you get from analyzing customer or revenue growth data, which you then benchmark against industry standards or competitors to check whether you’re moving, how fast, and in which direction.

But what does startup growth mean? When you have more revenue? Or higher customer growth rate? All of that—and even more. Business growth isn’t about a single number you need to constantly check whether it’s going up or down. It’s about multiple factors. More revenue is great, but if your customer acquisition costs skyrocket and eat up all your profits and churn is high, can you say it’s sustainable? A bigger customer base sounds promising, but if retention drops, is your business really growing? 

In this article, we’ll focus on the two main pillars that help determine if your business is expanding or hitting a growth wall: revenue growth metrics and customer growth rates. You can learn more about sales & marketing metrics, SaaS KPIs, and leading vs lagging metrics from our guides. 

It’s important to note that different startups may track different growth metrics (some, of course, maybe the same, while some may differ)—it all depends on the business model you’ve chosen. For example, a SaaS company should track MRR, ARR, and retention rates, while a marketplace platform—user engagement, transaction volume, and GMV.

Why do startups need to track growth KPIs?

Unlike established businesses with steady revenue streams, startups live and work in a highly uncertain environment; that’s why they need to count every decision, as it can either add extra points to or break their growth trajectory. When you track growth metrics, you see how your business is expanding in terms of revenue, customers, and retention, which helps you understand what’s working and what’s not and hints you to what you can do to scale effectively.

Let’s get into more detail about how growth tracking can add you extra points—it helps:

Prove product-market fit: Is your business really solving a problem?

Startups want to make sure that their solution solves a real problem for their target audience. How? Seeing high numbers in customer retention rates and low numbers in churn rates can tell you whether users find enough value in your products or services to stick around—either you’re gaining clients or losing them too fast. If losing too fast is your case, then you have problems with the product or its positioning, and that’s where you need to focus. 

Understand revenue trends: Is your business actually making money?

Revenue growth isn’t about making more sales; it’s about whether this growth is consistent and sustainable—your revenue grows steadily in the long run. And growth analytics can help you see this. Metrics like MRR, ARR, and revenue growth rate show whether your business is on the right track to growth. If your revenue is growing but your profit isn’t, it’s a sign that something is wrong—either costs are high or spending is inefficient.

Measure retention: Are customers staying or dropping off?

Of course, it’s hard to get new customers on board, but what’s even harder is to make the existing customers stay with you. If you see a high churn rate—people are leaving, meaning you must do something. Maybe you have problems with product-market fit? Or bad customer service? Or maybe your competitors perform better than you? Reasons vary. Although tracking growth metrics won’t give you clear answers to your “why” questions, it can give you a push to see and understand that something isn’t working well. On the flip side, high retention rates and growing CLV can show that customers are happy and are likely to stick around—meaning your revenue can also grow.

Attract investors: Will they get proof that your business is growing? 

Investors don’t just look at ideas—they also look at numbers. They want proof that your idea is really profitable and that your business is growing and will continue to grow in the long run. Growth metrics can give them this proof. They give evidence that your startup is scaling successfully—revenue and customer base are increasing, retention rates are strong, and [customer and revenue] churn rates are low—that’s what investors want to see. A startup without growth metrics is more likely to be viewed as a red flag as it doesn’t give any certainty about performance and future potential. 

Which growth metrics startups should track

“How to measure business growth?” is a typical question among startups, especially if they get lost in a myriad of metrics and KPIs. As when you start googling “what are key metrics” or “which growth metrics in business to track,” you’re more likely to get lots of articles speaking about different things. Pretty easy to get lost, especially if you’re a first-time founder. 

That’s why we’ve divided growth KPIs into two categories—revenue metrics and customer metrics—to address each side of startup growth.

Revenue metrics—to measure how fast your business is making money

Tracking the growth metrics below will help you see if your business is growing its revenue and how steadily it’s doing this. 

1️⃣ MRR (Monthly Recurring Revenue)

MRR is a growth metric that helps you see the total predictable revenue your business earns from subscription customers each month. 

Especially for SaaS businesses or subscription-based services, MRR helps to check financial health—how well the company retains customers, adds up revenue, and spots trends in growth, upsells, or churn each month. That’s why you’d better track it regularly. 

The MRR formula goes as follows: 

2️⃣ ARR (Annual Recurring Revenue)

ARR tracks the same as MRR but in the yearly equivalent. Thus, it gives a broader view of your company’s revenue and helps you better understand the long-term perspective of your startup growth and potential. 

There are two ways you can measure your ARR. 

OR

3️⃣ ARPA (Average Revenue Per Account)

With the help of this growth metric, you can see how much revenue each customer (or account) generates on average. This is of great use when you want to evaluate your pricing strategies and understand if different customer segments (small businesses vs enterprises) bring in more or less revenue. 

This metric is also typically more commonly used by SaaS and service-based businesses (just like MRR and ARR). 

4️⃣ Revenue growth rate

The revenue growth rate is exactly what it sounds like—a rate of how quickly your startup’s revenue is growing over time. And pretty logical is that if this revenue metric is positive, your revenue is growing, while negative shows it declines.

5️⃣ Revenue Churn

Revenue churn measures how much recurring revenue you lose when customers cancel or downgrade their subscriptions. If you have a high revenue churn rate, it means your company is losing money—either due to poor retention, pricing issues, or declining customer satisfaction.

Customer metrics—to measure how many customers use & stay with your product/service

Your startup growth depends not only on how much money you earn (revenue metrics) but also on how well your business acquires new users, keeps them engaged, and makes them stay with you for a long time. Below are the main customer growth metrics.

6️⃣ Customer growth rate

When you track your customer growth rate, you see how quickly your business is gaining new customers over time. A high growth rate means high demand—more and more customers want to use your product/service—while a slowing rate may mean your market is overcrowded or your acquisition strategies aren’t strong enough. 

7️⃣ Active Users (DAU, MAU, WAU) 

This growth metric can help you monitor how often people are actually using your product/service:

You should track them to see whether users are engaged and find value in your product/service.

8️⃣ Churn rate

This growth metric gives you the percentage of customers who left within a given period of time. When the churn rate is high, it typically means that your product/service doesn’t deliver enough value or there are issues with pricing strategies or competition (competitors perform better than you, and customers prefer to use their solutions).

9️⃣ Customer retention rate

The retention rate shows how many customers stay with your company over time. Pretty logical that the higher the retention, the better—keeping customers is cheaper than acquiring new ones. 

🔟 CLV (Customer Lifetime Value) 

CLV measures how much money you expect to make from a customer over the entire time they use your product/service. 

Although CLV is a mix of efficiency and growth metrics, we’ve decided to include it in this list because a growing CLV means growing revenue without depending only on attracting new customers. To elaborate, you make more money from existing customers through repeat purchases, upsells, or longer retention and, at the same time, keep your acquisition costs lower.

How to effectively measure your business growth: tips you should know

Knowing which growth metrics to track is important, but there are also some other aspects you need to pay attention to:

➡️ Focus on the right growth metrics for your startup. Different businesses grow in different ways, and thus, metrics that help track this growth may vary. Your task is to choose those that match your business model. For example, some SaaS growth metrics are MRR, churn rate, and CLV, while e-commerce may be GMV, conversion rate, and AOV.

➡️ Don’t track growth metrics in isolation. It’s not a good idea to rely only on one metric—growing revenue, for example, doesn’t necessarily mean profitability. Maybe your company is increasing revenue but burning too much cash, acquiring new customers at the same time. Or maybe you have a high DAU, but they aren’t converting to paying customers. Thus, your business isn’t actually growing. Efficiency and growth metrics typically go hand in hand as it’s important not only to measure whether and how your business is expanding but to check if this growth is actually sustainable—something investors highly appreciate.  

➡️ Choose your North Star metric—that single, important indicator that shows the value your startup provides to its customers and connects all the dots. If you have a SaaS company, your North Star metric might be the number of active users who completed a key action. For social media businesses, this might be time spent per session. Just note that your North Star metric should be directly linked to your revenue and customer metrics.

➡️ Don’t just track numbers; analyze the latest trends in metrics and the market. Simply tracking startup growth metrics like revenue churn or use growth won’t work if you don’t analyze trends and market context. Why? Numbers without relevant context may turn into poor decisions. Take a 10% revenue growth, for instance—it may seem great, but if your costs have increased by 20%, that isn’t cool anymore, as your profitability is actually declining. Or there’s a drop in DAU. At first, it might look bad, but if you know that it’s just a seasonal trend, you won’t overreact because you know it’s a temporary fluctuation.

➡️ Automate your growth tracking with analytics tools. This will save you time and reduce manual errors. Automated analytics tools offer live dashboards so you can spot trends immediately and react to these trends accordingly.