Growth metrics, demystified

"Aha moment"

The specific moment when a new user first realizes the value of your product. The emotional turning point where confusion becomes clarity. Different for every product.

Activation rate

The percentage of new signups who reach a defined "aha moment" - the point where they experience enough value to become real users. Different for every product: Slack's was 2000 messages, Facebook's was 7 friends.

Has Formula

Average revenue per user (ARPU)

The mean revenue generated per user over a specific time period. A key input for LTV calculations and pricing decisions.

Has Formula

Churn rate

The percentage of customers who stop using your product during a given time period. It's the opposite of retention rate. If your churn rate is 5% monthly, you lose 5 out of every 100 customers each month.

Has Formula

Conversion rate

The percentage of users who complete a desired action. Can measure many things: visitor to signup, signup to paid, trial to subscription, etc.

Has Formula

Customer acquisition cost (CAC)

The total cost of acquiring a new customer, including marketing, sales, and related expenses. The benchmark for efficient growth.

Has Formula

Customer lifetime value (CLV/LTV)

The total revenue you can expect from a single customer over their entire relationship with your business. Helps determine how much you can afford to spend on acquisition.

Has Formula

LTV:CAC ratio

The ratio of customer lifetime value to customer acquisition cost. Indicates whether your unit economics are healthy. The gold standard is 3:1 or higher.

Has Formula

Net Promoter Score (NPS)

A measure of customer loyalty based on one question: "How likely are you to recommend us?" Scores 0-6 are detractors, 7-8 are passives, 9-10 are promoters. NPS = % Promoters - % Detractors.

Has Formula

Product-market fit (PMF)

When your product satisfies a strong market demand. The point where growth becomes easier because the product sells itself. Measured qualitatively through user feedback and quantitatively through retention.

Has Formula

Retention rate

The percentage of customers who continue using your product over a given time period. Measured at different intervals: Day 1, Day 7, Day 30, etc. The complement of churn rate.

Has Formula

Time to value (TTV)

The time it takes for a new user to experience the first meaningful value from your product. Shorter is better - every minute of delay increases drop-off risk.

Viral coefficient (K-factor)

The number of new users each existing user generates. If K > 1, you have exponential growth. Calculated by multiplying invites sent per user by the conversion rate of those invites.

Has Formula