Marketing metrics you should care about as an early-stage B2C startup in Africa

Launching a startup is exciting, every decision you make as a founder has the potential to put your product 10 steps ahead or throw it a few hundred steps behind. And so any marketing decision you make must mostly be backed by data, and less by hunches.

To use data effectively, you need to know the right metrics to track and when to track them to make informed decisions and drive your business forward. 

This article looks at the essential metrics for early-stage startups, especially in Africa. We’ll examine which metrics matter most, how to analyze them effectively, and how to leverage those data and insights to optimize your product toward a winning path.

When you’re an early-stage B2C startup, focusing on the right marketing metrics is critical to understanding your market fit. 

I decided to reach out to product marketers to hear their thoughts on the most important marketing metric early-stage founders should focus on.

I talked with 4 product marketers, Ntongha Alagba from Norebase, Isaac Chima from Terragon Group, Abdulsalam Akinlusi from Fawgiri Technologies, and Seun Longe from Wild Fusion Limited, and the most frequent metrics mentioned were acquisition, retention, and revenue

Ntongha Alagba argued that while there are no specific KPIs exclusively defined for different stages of a startup, there are certainly some metrics that startups should focus on depending on their development stage. While the key performance indicators (KPIs) for early-stage and expansion-stage startups may essentially be the same, the targets and benchmarks for these metrics will obviously be significantly different. – Ntongha Alagba

For instance, an early-stage startup might aim for a Monthly Recurring Revenue (MRR) of $10,000, while an expansion-stage startup might set a target of $700,000 MRR.

KPIs Across Stages:

1. Common Metrics: Early-stage startups and startups in other stages usually track the same types of metrics, such as MRR, Customer Acquisition Cost (CAC), Customer Lifetime Value (CLV), and Churn Rate, because these are fundamental metrics that indicate business health and growth potential and they are relevant at all stages.
2. Differing Benchmarks:  But obviously the benchmarks for these metrics will vary depending on the startup’s maturity. For example, an early-stage startup might focus on achieving initial revenue targets and gaining traction, whereas an expansion-stage startup would focus on scaling and optimizing these metrics for sustainable growth.

Acquisition

As a B2C startup, your success is determined by one factor – your customers. How effectively are you attracting new customers to your business? This is the question customer acquisition metrics help you answer. It helps you understand your customer behavior, and using this data, you can question the success of your marketing campaigns and your overall growth strategy.

Customer Acquisition Cost (CAC)

This is the total cost of acquiring a new customer, including all marketing and sales expenses. This metric is important for understanding how much you need to spend to get new customers. As an early-stage startup in Africa, budgets can be tight, so optimizing CAC is essential to ensure that your growth is sustainable.

To calculate CAC, sum up all marketing and sales expenses and divide by the number of new customers acquired in a specific period. For example, if you spent $6,000 on marketing in a month and only acquired 50 new customers, your CAC would be $120 which is terribly high (at least depending on your customer LTV).

How to Optimize CAC:

1. Targeted Marketing Campaigns: Focus on marketing to your ideal customer profile to reduce wasted spend.
2. Content Marketing: Prioritize building your owned and earned media channels to attract organic traffic. Content marketing can produce customers down the line, without any extra cost.
3. Exceptional Customer Service: Exceptional customer service can encourage existing customers to refer new ones.

Conversion Rate

Conversion Rate measures the percentage of visitors (typically to your landing page or website) who complete a desired action, such as signing up to your app, making a purchase, or maybe booking a demo. This metric is important in understanding how effective your marketing efforts are.

To calculate the conversion rate, divide the number of conversions by the total number of visitors, then multiply by 100. For instance, if you had 1,000 visitors and 50 made a purchase, your conversion rate would be 5%.

Tips to improve Conversion Rate:

1. A/B Testing: Test different versions of your landing pages and CTA’s.
2. Clear Value Proposition: Clearly communicate the benefits of your product.
3. Simplify the process: Simplify the signup or purchasing process to reduce friction.

Retention

Retention metrics are essential for understanding how well you keep your customers engaged and satisfied over time, Seun Longe talked in-depth about this, she emphasized that a lot of founders obsess about acquisition (rightly so) but usually abandon retention entirely. High retention rates indicate a loyal customer base and lead to sustainable growth.

Why is retention so important:

• Acquiring a new customer is 5x more expensive than keeping an existing one. 
• Boosting customer retention by just 5% can lead to profit increases ranging from 25% to 95%. Selling to an existing customer has a success rate of 60-70%, compared to just 5-20% for new customers. 
• Loyal customers are five times more likely to make repeat purchases, five times more likely to forgive mistakes, four times more likely to refer others, and seven times more likely to try new products (According to a study by The Temkin Group)
• U.S. businesses lose $136.8 billion annually due to preventable customer churn. 
• According to a survey by American Express, they found out that 33% of customers may switch to a competitor after a single poor customer service experience.

I could These data show that retention is as important as acquisition and should be equally handled with more resources, effort, and focus. 

Customer Lifetime Value (CLTV)

Customer Lifetime Value (CLTV) estimates the total revenue a business can expect from a single customer throughout its business relationship. Once you understand your CLTV, IT helps you determine how much you can spend on acquiring a customer while remaining profitable.

To calculate CLTV, multiply the average purchase value by the number of purchases per year and the average customer lifespan. For instance, if your average customer spends $50 per purchase, buys twice a year, and stays with you for three years, your CLTV would be $300.

Tips to Increase CLTV:

1. Enhance Customer Experience: Provide excellent customer service and support.
2. Upsell and Cross-sell: Introduce complementary products and services.
3. Loyalty Programs: Implement programs that reward repeat customers.

Churn Rate

Churn rate is the rate at which customers say, ‘I’m not doing business with you anymore.’ It is the percentage of customers who stop using your product or service during a given time period. Churn may not always be due to factors that are in your control, such as economic issues, regulatory changes, or location changes. Sometimes, customers may simply no longer need your product or service. However high churn rates can indicate dissatisfaction and can significantly impact your revenue and growth.

To calculate the churn rate, divide the number of customers lost during a period by the number of customers at the start of that period, then multiply by 100. For example, if you started with 200 customers and lost 20 over a year, your churn rate would be 10%.

Tips to Reduce Churn:

1. Onboarding Process: Ensure new customers understand how to use your product effectively.
2. Regular Engagement: Keep in touch with customers through emails, updates, and support.
3. Feedback Loop: Actively seek and act on customer feedback to improve your product.

Revenue

Revenue metrics are the most important metric for an early-stage B2C startup. Revenue metrics give you a clear picture of your startup’s financial health, serve as indicators of growth and sustainability, attract investors, and aid in cash flow management.

Monthly Recurring Revenue (MRR)

Monthly Recurring Revenue (MRR) is the predictable revenue your business can expect to earn every month. This metric is particularly important for subscription-based models and helps gauge the financial health of your business.

To calculate MRR, multiply the number of subscribers by the average revenue per user. For example, if you have 200 subscribers each paying $20 per month, your MRR would be $4,000.

Tips to Boost MRR:

1. Include tiered Pricing: Offer multiple subscription levels to cater to different customer needs.
2. Annual Plans: Encourage customers to commit to longer periods with discounts on yearly plans.
3. Regular Updates: Continuously improve your product to justify subscription renewals.

Revenue Growth Rate

Revenue Growth Rate measures the increase in your company’s revenue over a specific period. This metric is crucial for understanding the overall financial progress of your startup.

To calculate the Revenue Growth Rate, subtract the revenue at the beginning of the period from the revenue at the end of the period, divide by the revenue at the beginning, and multiply by 100. For instance, if your revenue was $10,000 last month and $12,000 this month, your growth rate would be 20%.

Strategies to Increase Revenue Growth Rate:

1. Market Expansion: Explore new markets and customer segments.
2. Product Diversification: Introduce new products or services.
3. Sales Optimization: Improve sales processes and increase the efficiency of your sales team.

By focusing on these critical metrics —acquisition, retention, and revenue— early-stage B2C startups in Africa can make data-driven decisions, refine their strategies, and drive their businesses toward success while keeping it simple. Tracking and optimizing these metrics will provide valuable insights into your startup’s performance, helping you stay ahead in a competitive market.