

How to Track Six Key Metrics for Your Web App - ryancarson
http://thinkvitamin.com/web-apps/how-to-track-six-key-metrics-for-your-web-app/
Identified and defined the six key metrics you need to measure for your recurring revenue web app. Also shared an example Google Spreadsheet which can be downloaded and modified for your app.
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Sukotto
Your spreadsheet looks pretty cool. I think though that you could really do
with a little more explanation about _why_ it's doing some of the things it's
doing.

Take, for example, Customer Acquisition Cost Ratio (CACR) for the 2nd quarter
(cell [H33])

Going by the formula that's:

    
    
      [H33] = CACR for 2nd Quarter = 
      ( 
        ([CMRR for June] - [CMRR for prev March]) 
        * 4 
        * ( [Gross profit for Q2] / [Total CMRR for Q2] ) 
      ) 
      / [Marketing costs for Q1]
    
    

Why do we only use the numbers for March and June? What is that magic 4? Why
are we dividing by the previous quarter's marketing?

Your post is your chance to explain why you are right and why we should trust
your spreadsheet. Don't just wave your hands and say "it's complicated".

~~~
ryancarson
Appreciate the feedback. I learned how to calculate those numbers from
Bessemer Ventures PDF, which I linked to in the article. Essentially you're
taking the difference in CMRR for the quarter and annualizing it, then
dividing by the marketing cost for the previous quarter.

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rubeng
This is going to be extremely useful for me. I know the basics (churn, CMMR,
etc.) but I'm missing some of the others.

I'm not quite sure I understand why CPA is so simple. Right now I'm not
spending a dime on advertising so I'm not spending anything to acquire these
users (it's WOM and SEO). Once I start advertising shouldn't that calculation
go against customers customers acquired through my advertising efforts instead
of all new users?

~~~
ryancarson
Marketing costs are only directly related to the new customers you acquire the
same month (or sometimes the following month - as long as you're consistent).
This isn't always strictly correct, but it should give you a good average CPA
value.

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bryanh
I'm in the tricky situation of not having enough users within BitBuffet.com to
really gauge these numbers accurately. I'm currently paying about 8 months of
customer revenue to pull in a new paying customer, but honestly, that number
isn't reliable.

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Nogwater
How much "throughput" do you need before stats like this start to mean
anything? For example, if you only acquire 5 new users per month, can you
really calculate a meaningful churn rate?

~~~
ryancarson
If you only acquire five new users a month, then something is seriously wrong.

