Key Performance Indicators (KPIs) play a critical role in measuring the success and progress of any business. For tech companies, data is even more important due to the dynamic and fast-paced nature of the industry. New tech is emerging everyday, and the tech companies need data points to see how they’re doing in comparison to their competition.
After working with multiple tech companies, we’ve come up with the most important KPIs for any tech related business. We’ve also discussed how the trend would continue to 2024.
Without further ado, let’s discuss the KPIs that any tech company can use for reporting.
1. Monthly Recurring Revenue (MRR)
One of the most fundamental KPIs for tech companies is MRR. It provides insights into the company’s revenue growth by assessing monthly recurring sales.
2. Customer Acquisition Cost (CAC)
CAC helps tech companies understand how much it costs to acquire a new customer. By measuring the marketing and sales expenses against the number of new customers, companies can optimize their strategies.
3. Churn Rate
Churn rate measures the percentage of customers who stop using a tech product or service over a specific period. A high churn rate indicates that improvements need to be made in customer satisfaction or product quality.
4. Customer Lifetime Value (CLTV)
CLTV estimates the total revenue a tech company can expect from a single customer over their lifetime.
5. Monthly Active Users (MAU)
MAU measures the number of unique users who engage with a tech product or service in a given month. Active users provide an insight into user engagement and the product’s popularity.
6. Daily Active Users (DAU)
Similar to MAU, DAU measures the number of unique users engaged with a product or service on a daily basis. It helps assess user retention and the stickiness of the product.
7. Average Revenue Per User (ARPU)
ARPU calculates the average revenue generated by each user. It is an essential metric for tech companies to monitor their monetization strategies.
8. Gross Profit Margin
Gross profit margin calculates the percentage of revenue that remains after deducting the cost of goods sold. It helps in evaluating the company’s profitability and efficiency in managing costs.
9. Net Promoter Score (NPS)
NPS assesses customer satisfaction and loyalty by measuring their willingness to recommend a tech product or service to others. It provides insights into the overall brand perception.
10. Time to Market
Time to Market measures how quickly a tech company can develop and launch a new product or service. TTM helps in assessing the company’s ability to meet market demands and stay ahead of competitors.
11. Customer Satisfaction Score (CSAT)
CSAT helps in evaluating customer satisfaction based on their experiences with a tech product or service. It aids in identifying areas of improvement and provides actionable insights.
12. Return on Investment (ROI)
ROI measures the profitability of an investment made by a tech company. Measuring the return helps in assessing the success of marketing campaigns, product development, and other initiatives.
13. Employee Productivity
Monitoring employee productivity is crucial for tech companies. It helps in evaluating the efficiency of the workforce and identifying areas where improvements can be made.
14. App Downloads
For tech companies with mobile applications, tracking app downloads is crucial. It provides insights into the popularity and reach of the app.
15. Conversion Rate
Conversion rate measures the percentage of website visitors or app users who take a desired action, such as making a purchase or signing up for a service. While true for every business (ever), Conversion Rate is specifically important for tech companies as tech companies are almost always indulged in Online (Digital) Marketing.
16. Average Session Duration
Average session duration measures how much time users spend on a website or app per session. It helps in understanding user engagement and the stickiness of the product.
17. Cost per Lead (CPL)
CPL determines the cost of acquiring a new lead for a tech company. Cost Per Lead helps in optimizing marketing and sales strategies to maximize lead generation efficiency.
18. Website Traffic
Website traffic measures the number of visitors to a tech company’s website. SEO generated traffic helps in analyzing marketing strategies and the overall online presence of the company.
19. Support Ticket Resolution Time
For tech companies offering customer support, tracking support ticket resolution time is of utmost importance. While this KPI is usually not tracked by smaller tech companies, we highly encourage everyone to do so.
20. Social Media Engagement
Social media engagement encompasses metrics like likes, shares, comments, and mentions on various social media platforms. Tracking social media engagement can help you evaluate if you’ve built a decent amount of brand authority.
21. R&D Investment Ratio
R&D investment ratio measures the allocation of a tech company’s budget towards research and development. It reflects the focus on innovation and future growth.
22. Customer Retention Rate
Customer retention rate indicates the percentage of customers who continue using a tech product or service over a specific period. CRR is quite important if you want to understand if your customers are using your app/tech on a regular basis. It will also help you analyze if word of mouth will become a good channel for you.
23. Average Order Value (AOV)
AOV calculates the average value of each order placed by customers. It helps in assessing the effectiveness of upselling and cross-selling strategies.
24. Time on Page
Time on page measures how much time users spend on a specific page of a website. On Page time is important in deciding if your UX is good enough. We also advise tech companies to closely monitor user behavior on their app/website as it gives a clue about any difficulties users might face when they’re on the platform.
25. App Retention Rate
For tech companies with mobile applications, app retention rate measures the percentage of app users who continue using the app over a specific period. It helps in assessing the app’s stickiness and the effectiveness of engagement strategies.
26. Lead-to-Customer Conversion Rate
Lead-to-customer conversion rate calculates the percentage of leads that eventually convert into paying customers. This is important to measure for assessing the effectiveness of sales strategies and lead nurturing tactics.
27. Agile Velocity
Agile velocity measures the average amount of work completed by a tech company’s development team during a sprint or iteration. You need to evaluate the cost of developing a feature or fixing a bug, and measuring agile velocity as a KPI will help you make smarter decisions.
28. NPS Promoters vs. Detractors
Segmenting NPS responses into promoters (customers who are highly likely to recommend) and detractors (customers who are unlikely to recommend) helps in assessing the overall sentiment towards a tech product or service.
29. Market Share
Market share measures the percentage of total sales or revenue a tech company holds in its target market. The market share a company has is a very good measure of the quality of the product, and the C-Suite’s ability to make an impact.
30. Cybersecurity Incident Response Time
Growing concerns regarding cybersecurity require tech companies to monitor their incident response time. It helps in assessing the company’s ability to detect, resolve, and prevent security breaches.
Emerging Trend: KPIs for 2024
Looking ahead to 2024, one notable trend in the tech industry revolves around ethical and sustainable KPIs. As consumers become more conscious of their impact on society and the environment, tech companies are under increased scrutiny to align their practices with environment friendly standards.
- Carbon Footprint: Measuring and reducing the environmental impact of a tech company’s operations, products, and services.
- Diversity and Inclusion: Tracking diversity metrics to ensure fair representation and equal opportunities within the company.
- Data Privacy: Assessing data privacy measures and compliance with regulations to protect user information.
- Supplier Sustainability: Evaluating suppliers based on their sustainability practices and ethical standards.
- Employee Well-being: Monitoring employee satisfaction, work-life balance, and mental health to create a positive work environment.
These ethical and sustainability KPIs reflect the growing importance of corporate social responsibility in the tech industry. Tech companies that prioritize these metrics are not only meeting consumer expectations but also enhancing their reputation and long-term sustainability.
From traditional metrics like revenue and user engagement to the emerging environmental metrics, tech companies must adapt to the changing landscape and prioritize measurement. By leveraging these KPIs effectively, tech companies can make informed decisions, drive improvement, and stay ahead in the competitive industry.
