Metrics That Actually Matter (And the Ones That Don't)

I saw a startup deck once and counted something like 47 different metrics across the slides. When I asked the founder which three numbers would tell them if the business was healthy or dying, they couldn’t answer clearly. They were measuring everything and understanding nothing.

This is the curse of modern analytics: we can track anything, so we think we should track everything. But most metrics are just noise dressed up as insights. The real skill is figuring out which few numbers actually matter for your business.

The Vanity Metric Trap

That startup isn’t alone. Most founders confuse comprehensive tracking with being data-driven. They build dashboards packed with numbers that feel important but don’t actually help them make better decisions.

Take total registered users. It only goes up, which feels good, but tells you nothing about business health. You could have a million registered users and still be dying if none of them are paying or engaged. Same with lifetime revenue, page views, or email subscribers. These vanity metrics correlate with success but don’t necessarily cause it.

The most dangerous ones are metrics you can game by spending money without improving the underlying business. You can always buy more traffic or acquire more users, but that doesn’t mean your business is getting better.

Here’s the test: if a metric changes, do you know what to do differently? If not, you’re probably tracking the wrong thing.

What Makes Metrics Matter

The metrics worth tracking share three characteristics. First, they connect directly to business outcomes. Every number on your dashboard should trace back to revenue, profitability, or sustainable growth. If you can’t draw that line, question why it’s there.

Second, they’re actionable. When customer acquisition cost increases, you know to improve targeting, optimize your funnel, or adjust pricing. When usage depth drops, you know to focus on onboarding or feature adoption. Good metrics come with built-in next steps.

Third, they predict the future rather than just report the past. Pipeline coverage tells you about next quarter’s revenue. Feature adoption rates predict which customers will renew. Leading indicators let you fix problems before they show up in your bank account.

The Three-Metric Rule

Here’s how to cut through the noise: if you could only track three metrics to run your business, what would they be?

For most SaaS businesses, it’s some version of monthly recurring revenue growth (are you growing?), net revenue retention (are customers expanding or churning?), and customer acquisition cost payback period (is growth sustainable?). These three numbers capture whether you’re growing, whether customers are happy, and whether that growth is efficient.

Your specific metrics might be different, but the principle holds. Identify the few numbers that capture your business model’s health, then build everything else around understanding and improving them.

The startup I mentioned earlier went through this exercise. They realized that despite tracking 47 metrics, only a few actually influenced their decisions. Once they focused on those, their monthly planning meetings got shorter and their execution got sharper.

Stage-Specific Focus

The metrics that matter evolve as your business grows. Pre-product-market fit, traditional SaaS metrics are mostly vanity. You don’t have enough data for lifetime value calculations to be meaningful, and growth rates are too volatile to be useful. Instead, focus on learning metrics: customer interview feedback, feature adoption depth, and early retention signals.

Once you hit product-market fit and start scaling, classic growth metrics become relevant. Monthly recurring revenue growth, channel efficiency, and cohort retention tell you if you’ve found a repeatable growth engine.

At scale, the focus shifts to optimization and efficiency. Unit economics by segment, gross margin trends, and operational leverage become the numbers that matter most.

Building Your Metric Stack

Start with outcomes and work backward. Define what success looks like in 12 months, identify what has to be true to get there, then find the early signals that predict those drivers.

Your executive dashboard should fit on one screen. If you need to scroll, you’re tracking too much. Every number should be there for a specific reason, and when one changes, you should know exactly what to investigate next.

The best metric systems combine quantitative data with qualitative insights. Numbers tell you what’s happening, but customer conversations tell you why and what to do about it. When retention drops, talk to churned customers. When conversion improves, understand what changed in the experience.

The Real Test

The most important metric might be how often your metrics actually change your behavior. If you’re tracking numbers that don’t influence your decisions, you’re wasting time creating the illusion of being data-driven.

Good metrics create productive discomfort when they trend the wrong way. They should be the foundation of your most important business conversations and force you to act when things go sideways.

Remember: metrics are tools, not goals. The point is to build a better business, not to have better numbers. The right metrics help you focus on what matters most and give you early warning when things go wrong. Everything else is just dashboard decoration.