App Analytics KPIs for Start-Ups

Raising funds for your app start-up? Asked by your investors to provide metrics? Or if your team spends more time analyzing and pulling data then building and marketing your app, it is time to invest in app analytics. As an app analytics company, StrategicDB has built over 100 dashboards for the purpose of providing insights to investors and teams.

What investors are looking for?

There are a few standard metrics which most investors will ask for both your app and company. Some investors will require more in-depth look while others prefer to look at the big picture. Teams often fail to tell a story with numbers by just providing an actual number for example, revenue as oppose to looking at the trend such as our revenue grew by X% this month over previous. Or comparing the metrics to benchmarks and competitors. For example, if you are spending $3 per install but an industry average is $5 per install even if you have an increase in cost per install it is still below the industry standard. Therefore, putting numbers in context will go a far way. Remember, that while you know your business and industry the investor may not.

How to present your data?

Once you have your metrics it is important to automate as much as you can so that you have real- or next to real time metrics ready to go at any request. On top of providing those metrics to potential and current investors, having these numbers internally will help drive your app forward. Having a unified dashboard will also help teams come together and speak the same language.

Data should be presented in content to previous months or quarter, as a measurement against goals and benchmarks and provide insights. The best metrics to use is a widget that tells you month over month percentage change, a bar graph for trends ideally over 12 months to identify seasonality, and a table to look at a breakdown between different channels. Finally, for those that want to go beyond providing a goals widget will go along way to ensure goals are met or exceeded. Some BI tools will allow you to set alarms, for example, you can set an alarm for your marketing team when cost per install is increased by 5%.

What Business Intelligence Tool To Use?

As a start-up analytics agency we work with many different tools such as specific to mobile apps such as MixPanel, some are free such as Google DataStudio (Looker), while others are focused on marketing such as Salesforce Intelligence. The tool matters when you are trying to connect (automate) different sources, so as long as you have sources connected, you can use any tool you like. Therefore, our advise is to find a tool that fits your echo-system and then customize it to your needs.

Metrics that matter to investors and your teams:

KPIs (Key Performance Indicators) will differ by app, some are universal and should be considered. Also you may not wish to share all of the KPIs with your full team due to privacy issues or to make sure they focus on metrics they can control. As a mobile app analytics consultant, we typically recommend asking your investors and teams on what KPIs matter for you and what data is missing today that can help you make decisions.

  • Revenue: If you have any funds coming in, it could be your in-app purchases, subscription revenue or other forms. For most start-ups however, you maybe pre-revenue therefore this metric would not make sense to include. For other start-ups projections make more sense because you are anticipating revenue down the line. Automating this field make sense if you have revenue for other business a projection can be added as an image to add to your automated dashboard.
  • Burn Rate: another company metric which looks at how much runway you have left over from your cash reserves. This could be calculated as a net or gross. The calculation takes into account your cash + revenue / monthly expenses to see how many months are left over. This calculation is typically combined fixed expenses such as employee’s salaries, rent, expenses to operate a business such as subscription to software those are predictable, but some expenses are unpredictable such as marketing costs which could depend on revenue you are bring in as it could be a percentage of revenue for example. This KPI is often done by accounting or finance teams and can be added to your dashboard from their excel or accounting tools.
  • New Users: users are the key to growth of any mobile app company. Therefore, measuring new users is key to identify if there is growth and what that growth looks like. For some businesses new users would be based on forms they have filled out or using simple new downloads. Therefore, this should be defined prior to automating. You can use tools such as Google Analytics to bring in new users or your own CRM to identify how many people signed-up.
  • Cost Per Install: It is important to understand the true value of your cost. While most marketing teams use tools such as Google, Apple Ads or Social Media that reports cost per conversion, the real cost per install is using total marketing budget divided by total new users. This will include both organic downloads and paid, however, it will measure non digital initiatives that may not be attributed and will keep it consistent throughout use of different channels to drive users.
  • Marketing Return on Investment: To calculate your MROI is to take your total revenue – total marketing cost/ marketing cost. This metric should give you if you are making more then spending the lower the number the better. If you get less than 1 that means you are not breaking even and are spending more then what you are making. Which maybe ok for growth start-ups but should be monitored.
  • Retention Rates: Depending on your business you may have high or low retention rates. For example, if you are running a travel app, most people do not use travel apps more than a couple of times a year when they travel, therefore, retention rates may not be as an important for some apps as others. To calculate retention rate, you can use a formula: number of monthly active users/number of monthly installs, if you are looking at your monthly rate. There are many tools including google analytics that can provide a cohort chart of retention by day.
  • Events: If you have not implemented event tracking you should, ideally your events are important for you to understand your app usage. For example, if you have content, events could be name of content so you can see how many people viewed it, it could be filling out forms so you can collect conversion metrics, it could be clicks on certain buttons and so on. This information is important for your product development, marketing and investors to understand how your app is being interacted with and what features to expend on. Event tracking can be built using Firebase/Google Analytics or using third party analytical SDKs.
  • Avg. Session Duration: The average time a user interacts with your app is important for various reasons. If you are revenue is based on ads, the longer the app is in use the higher chance they will click on an ad and create revenue. There is also correlation between app usage duration and in-app purchases or subscriptions. Overall it provides investors and internal teams with information on how long people stay on the app.
  • Average Revenue per User or Lifetime Value of a User: Depending on your app you want to track how much revenue each user brings or what is the lifetime value of a user. If you have a one time revenue for example an in-app purchase you can use average revenue per user, the way to calculate it is to use the formula: total revenue /total number of new users in a specific month. However, if your app has multiple revenue streams such as in app purchases and ad revenue or subscription you would need to calculate the lifetime value of that user. For start-ups with limited time on the market, lifetime value would have to be a guess based on benchmarks of how many years or months a user will be active and multiple it by total number of users.

Drill Down:

Now that you have identified key performance metrics that matter for your business, it is time to design the dashboard that goes beyond and increase or decrease in users. Here are some common tables/graphs that are used by most app companies. As a analytics company that automates dashboards , the key to automation is consistent data and tracking.

  • Channel Reporting: For marketing it is important to know what channel/source or campaign drove the most downloads or revenue. Ideally you have a table that looks at breakdown by channel and number of new users, avg. session duration, number of events taken, revenue generated, cost per install and retention rate. This information will provide you information on where to invest your marketing funds and the return on investment per channel and/or campaign.
  • Demographic Information: Depending on your app you maybe tracking information such as gender, age, location, or other information like household income. That information is dependent on type of app for example, financial app will probably have more financial related information per user then a game. Demographic information can help identify your ideal target market and should look at metrics such as percentage of users per each segment, split of revenue by segment and cost per install/ MROI per segment can help identify your key target market.
  • Event information: For your product development team it is important to know what events are being used the most or least so you can focus on creating more of the features that your users want.
  • Bugs: This goes without saying but internally you should have some bug tracking installed so you can see crushes, customer service complains such as reviews on the app store or google play store and other information that can identify problems for your developers to fix.

Other reporting maybe needed for investors such as EBITDA, Churn Rate, Monthly Recurring Revenue, Gross Marin, Cash on-hand, and so on. Therefore, when designing the dashboard and prior to automating it is a good idea to ask your investors what metrics matter to them and answer for your teams what metrics matter for us. Keep in mind that as a start-up you may not have all the data available but starting early can help avoid saying to your investors I do not know we never tracked that.   For those app development companies that wish to have their dashboards built for them, StrategicDB can help. We are an app analytics agency that has built many different dashboards for start-ups and established business for the purpose of raising capital and unifying internal teams.