We’re witnessing the end of the print era; digital tools and analytics are now the most valuable means of measuring the progress of your startup. Today, if you crunch a couple of equations, you can understand and measure the reach, engagement, and sales revenues of your marketing efforts.
Here’s a breakdown of the technical terms you need to understand how your business is doing.
- Customer Acquisition Cost (CAC): The full price it costs you to acquire new customers—basically, what you spent on getting a customer to use your website or application, whether through advertising, promotional material, sponsored content, videos, or other avenues. Your concern should be making your business profitable, or at least less costly. One of the things that helped Eat App, as its founder, Nezar Kadhem, tells us, was to develop good-looking screenshots for use in the App Store. He argues that the 10-second window for convincing someone to download it can really make or break your app. If you haven’t convinced that viewer, you could end up spending more on “acquiring” that them later on.
- Cost Per Install (CPI): This is the price paid for advertising whenever the consumer installs the advertised application. You can measure the CPI by dividing the cost of advertising by the number of installs. Your goal is to minimize this cost. If not, good questions to ask yourself include, “Is my product solving a problem in the Bahraini market? Is my technology working?” or even “Am I getting these messages across clearly”?
- Bounce Rate: This rate tells you what percentage of your visitors/users leave your website/app before doing something else. You want your bounce rate to be as low as you can get it: the more time someone spends on your site/app, the more likely they are to actually do something you want them to do. For example, the longer someone spends on the Malaeb app, the more likely they’ll be to want to book a football pitch.
- Conversion Rate: in other words, the percentage of visitors who did what you wanted, whether that was signing up, subscribing, making a purchase, or downloading something. Google Analytics, amongst many other tools, can help you track these conversion rates. Low conversion numbers can very quickly tell you what’s wrong with your app/website/platform—anything from poor design, problems with your offerings, or otherwise disinterested visitors. Think of that one delivery app (though they shall not be named, as we have many in Bahrain) that is unnecessarily complicated, with a ridiculous number of sign-ups, confirmations, and mandatory fields. It’s safe to say that they probably have a low conversion rate because of their long procedures and processes.
- Customer Retention Rate. This number tells you which percentage of customers return to your business to buy, order, or purchase again. If this rate is low, it could indicate a symptom of a product or service that just doesn’t stick for the target audience. Using the example of the complicated food app again, the customer retention rate probably is low because customers will turn to the easier food app—or the one with better offers, that actually solves a problem they have.
- Amplification Rate: the number of shares per post on social media, or the rate at which your followers take your content and share it through their network. Your goal is to create viral content that will raise the amplification rate.
- Channel-Specific Traffic. This is more of a source than a metric, but it is nonetheless valuable in helping you understand where your customers, users, and subscribers come from. You can find the channel by going to the “Acquisition” section of Google Analytics. In Bahrain, you might be surprised to see that a lot of traffic comes from more than Instagram and Facebook primarily, and you can use that to your benefit.
We hope this list wasn’t too confusing. In any case, it’s good to have an idea of these metrics, because they exist for a reason: numbers can be used in investor meetings because they give unique insights into how your startup is doing.