Handbook
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Growth & Marketing
Growth Metrics That Actually Matter
Track the right numbers and you'll know exactly what to work on. Track the wrong ones and you'll optimize for vanity.
Metrics drive decisions. Track the right numbers and you’ll know exactly where to focus. Track the wrong ones and you’ll optimize for vanity while the business struggles.
Here’s how to build a metrics system that drives growth.
The Metrics Hierarchy
Vanity Metrics
Numbers that feel good but don’t drive decisions:
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Total registered users (including inactive)
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Page views (without context)
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Social followers
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App downloads
These can all go up while your business goes down.
Activity Metrics
What users do:
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Daily/monthly active users
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Feature usage
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Session length
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Engagement frequency
Better than vanity metrics, but still don’t tell you about business health.
Business Metrics
What matters for the business:
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Revenue
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Profit margins
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Customer acquisition cost
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Lifetime value
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Churn rate
These connect directly to business survival and success.
Focus on the Right Level
Early stage: Focus on finding product-market fit signals (engagement, retention).
Growth stage: Focus on scalability (CAC, LTV, efficiency).
Scale stage: Focus on profitability and efficiency.
The North Star Metric
What It Is
A single metric that best captures the core value you deliver to customers.
Examples:
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Airbnb: Nights booked
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Slack: Daily active users
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Facebook: Monthly active users
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Spotify: Time spent listening
Why One Metric
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Aligns the entire company
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Simplifies decision-making
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Focuses energy on what matters
Choosing Your North Star
It should:
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Reflect customer value (not just business activity)
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Correlate with revenue (leading indicator)
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Be something you can influence
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Be measurable
Not revenue itself: Revenue is a lagging indicator. North star should lead revenue.
Acquisition Metrics
Traffic Metrics
Visitors: People who come to your site/product.
Traffic by source: Where visitors come from (organic, paid, direct, referral).
Traffic quality: Bounce rate, time on site, pages per session.
Conversion Metrics
Visitor → Signup: What percentage of visitors register.
Signup → Activated: What percentage complete onboarding/core action.
Activated → Paid: What percentage convert to paying customers.
Track the full funnel, not just the end.
Cost Metrics
Customer Acquisition Cost (CAC):
CAC = Total Sales & Marketing Spend / New Customers Acquired
CAC by channel: Different channels have different costs.
Payback period: How long to recover CAC from a customer.
Engagement Metrics
Active Users
DAU (Daily Active Users): Users who engage daily.
WAU (Weekly Active Users): Users who engage weekly.
MAU (Monthly Active Users): Users who engage monthly.
Stickiness (DAU/MAU): What fraction of monthly users engage daily. Higher = stickier product.
Feature Engagement
Feature adoption: What percentage use specific features.
Feature frequency: How often they use those features.
Core action completion: Are users doing the thing that matters?
Session Metrics
Session length: How long users spend per session.
Sessions per user: How often they return.
Session depth: What they do during a session.
Retention Metrics
Cohort Retention
Track groups of users who joined at the same time:
Day 1 retention: Users who come back day after signup.
Day 7 retention: Users who return after a week.
Day 30 retention: Users who return after a month.
Long-term retention: Retention curve over months/years.
Retention Shapes
Flattening curve: Good. Users who stay keep staying.
Declining curve: Bad. You’re losing everyone eventually.
Improving curve: Great. Product gets stickier over time.
Churn Rate
Customer churn: Percentage of customers who cancel.
Revenue churn: Percentage of revenue lost to cancellations.
Net revenue churn: Revenue churn minus expansion revenue. Can be negative (expansion > churn).
Churn Benchmarks
Monthly SaaS:
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< 2% monthly churn: Excellent
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2-5% monthly churn: Okay
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5% monthly churn: Concerning
Annual SaaS:
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< 10% annual churn: Excellent
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10-20% annual churn: Acceptable
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20% annual churn: Problem
Revenue Metrics
Core Revenue Metrics
MRR/ARR: Monthly/Annual Recurring Revenue.
Revenue growth: Month-over-month, year-over-year.
ARPU: Average Revenue Per User.
Revenue Quality
Net Revenue Retention (NRR):
NRR = (Starting MRR - Churn - Contraction + Expansion) / Starting MRR
NRR > 100% means you grow even without new customers.
Gross Revenue Retention (GRR):
GRR = (Starting MRR - Churn - Contraction) / Starting MRR
GRR shows how much you keep without expansion.
Unit Economics
Lifetime Value (LTV):
LTV = ARPU × Gross Margin × Customer Lifetime
Or:
LTV = ARPU × Gross Margin / Monthly Churn Rate
LTV:CAC Ratio:
Target: LTV > 3× CAC
Below 3:1, you’re spending too much to acquire.
Building Your Metrics Dashboard
Tier 1: Daily Check
Metrics you look at every day:
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New signups
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Active users
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Revenue (if applicable)
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Any critical alerts
Tier 2: Weekly Review
Metrics you review weekly:
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Conversion rates
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Engagement trends
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Churn/retention
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Channel performance
Tier 3: Monthly Deep-Dive
Metrics you analyze monthly:
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Cohort analysis
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Unit economics
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CAC/LTV by segment
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Trend analysis
Setting Up Tracking
Start simple:
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Google Analytics for website
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Product analytics (Mixpanel, Amplitude, PostHog)
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Revenue tracking (Stripe, ChartMogul)
Build up:
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Dashboards (Metabase, Looker, Mode)
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Data warehouse (for complex analysis)
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Custom tracking for specific needs
Don’t over-engineer early. Start with what you can sustain.
Common Metrics Mistakes
Tracking Too Much
Drowning in data without clarity on what matters.
Fix: Identify 5-10 key metrics. Ignore the rest.
Tracking Too Little
Not having data when you need to make decisions.
Fix: Implement basic tracking from day one.
No Segmentation
Treating all users/customers as one group.
Fix: Segment by acquisition source, cohort, plan type, behavior.
Ignoring Cohorts
Looking at aggregate numbers instead of groups over time.
Fix: Always analyze by cohort. Aggregate hides trends.
Short-Term Focus
Obsessing over daily fluctuations.
Fix: Look at trends over weeks and months.
Vanity Focus
Celebrating metrics that don’t drive business.
Fix: Always ask: “How does this connect to revenue and retention?”
Metrics by Stage
Pre-PMF
Focus on:
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Engagement signals (are people using it?)
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Retention (do they come back?)
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Qualitative feedback (what do they say?)
Ignore:
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Growth rate
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CAC efficiency
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Revenue optimization
Finding PMF
Focus on:
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Retention curves (flattening?)
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Word of mouth (organic growth?)
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ICP identification (who loves it?)
Signs of PMF:
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Good retention
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Organic growth
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Users would be “very disappointed” to lose product
Post-PMF
Focus on:
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Growth rate
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Unit economics (CAC, LTV)
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Channel efficiency
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Scalability signals
Now you can optimize for growth.
Key Takeaways
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Focus on business metrics (revenue, retention, CAC) not vanity metrics (followers, total users)
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Choose a North Star metric that reflects customer value and leads revenue
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Track the full acquisition funnel: visitor → signup → activated → paid
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Retention by cohort is essential—aggregate numbers hide critical trends
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LTV:CAC ratio should exceed 3:1 for sustainable growth
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Net Revenue Retention > 100% means you grow without new customers
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Build a tiered dashboard: daily check, weekly review, monthly deep-dive
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Segment everything: channel, cohort, plan, behavior
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Match metric focus to stage: engagement early, efficiency later
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Start simple and build up—don’t over-engineer analytics infrastructure
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