In my experience, many companies running dashboards full of metrics aren't measuring the wrong things. They're measuring the right things, but for someone else's business.
The subscription company obsessing over ROAS. The marketplace measuring total GMV like it's revenue. The SaaS business reporting monthly revenue without checking whether last year's cohort is still paying.
Wrong metrics don't just give you bad data. They give you the illusion of clarity while the real problems compound quietly underneath.
The fix is to match your metrics to your model. Every business type has a small set of numbers that actually reveals what's happening, and a larger set that distracts from it.
E-Commerce: New vs. Returning Revenue Split
If 90% of your revenue is coming from new customers, you don't have a growth business. You have an acquisition treadmill.
E-commerce brands often celebrate revenue records without asking who's generating them. When the split skews heavily toward new customers, it means you're spending to replace people who left instead of building on a compounding base. The metric that surfaces this immediately is the new vs. returning revenue split, tracked over time. If returning revenue isn't growing as a share, retention is broken.
Subscription and SaaS: Net Revenue Retention (NRR)
If your NRR is below 100%, your existing customer base is shrinking. Not stalling: shrinking. That holds even if top-line revenue is growing from new customers.
Net Revenue Retention tells you whether the revenue from existing customers is expanding, flat, or contracting after accounting for downgrades and churn. A company with 95% NRR needs constant new customer acquisition just to stay flat. At 110% NRR, existing customers fund your next growth phase before you've added a single new one. In my view, few metrics separate a durable subscription business from a leaky one as clearly.
Sales-Led Funnels: Time to Convert
Funnel conversion rates without time context are nearly useless. A 12% demo-to-close rate sounds like a number. A 12% demo-to-close rate with a 47-day average time-to-close tells you a story.
In sales-led businesses, the cohort view is everything. When you combine conversion metrics with how long each stage takes (your 7-day cost per demo, your 30-day pipeline velocity), you can model where the constraint actually lives. Is it lead quality? Sales cycle length? Contract negotiation? Velocity metrics answer that. Conversion metrics alone don't.
Marketplaces: Take Rate × GMV per Active Buyer
Total GMV is a vanity metric for marketplaces. What matters is the revenue power per active participant.
Take Rate × GMV per Active Buyer tells you whether your marketplace is actually creating economic value, and whether you're capturing your share of it. A marketplace with growing GMV but declining take rate is being commoditized. One with flat GMV but rising GMV per active buyer is deepening engagement. Those are completely different businesses with the same headline number.
The Universal Layer: What Every Business Needs
Regardless of model, these four metrics belong in every executive dashboard:
- CAC: Fully loaded, not just media. If you're only counting ad spend, you're understating acquisition cost. People cost, tool cost, outside partner fees: it all belongs in the numerator.
- LTV: Margin-adjusted, not revenue. Revenue-based LTV overstates the value of every customer. Strip it to contribution margin, and the real economics of your growth model become visible.
- Payback Period: Aligned with your CFO. What counts as acceptable payback is a capital allocation decision. If marketing and finance aren't aligned on this number, you're optimizing for different things.
- LTV:CAC: Useless without a clear horizon. A 3:1 ratio means nothing if you haven't defined over what period you're measuring LTV. Set the horizon. Then hold it.
Too many metrics are as dangerous as the wrong ones. In my experience, the companies that measure the most often understand the least, because they've buried the signal in noise.
Match your metrics to your model. Start with the three or four numbers that actually tell you whether the business is healthy. Build from there.
David Manela is co-founder of Exactius, a growth and data science company. Follow him on LinkedIn for more frameworks on growth, marketing, and capital allocation.
David Manela
David Manela is the founder of Exactius and creator of the Growth Operating System — a framework for deploying capital-efficient, compounding growth inside scaling companies.
FAQ
Frequently asked
How do you match KPIs to your business model?
Start from how the business makes money. The author argues each model has a few revealing numbers: the new versus returning revenue split for ecommerce, net revenue retention for subscription and SaaS, time to convert for sales-led funnels, and take rate times GMV per active buyer for marketplaces. He adds fully loaded CAC, margin-adjusted LTV, payback period and LTV:CAC as a layer every model should track.
Why does the share of revenue from returning customers matter in ecommerce?
A rising returning share means growth is building on existing buyers. Research by Frederick Reichheld of Bain & Company, cited in Harvard Business Review in 2014, found that increasing customer retention rates by 5% increases profits by 25% to 95%. The same article says acquiring a new customer is anywhere from 5 to 25 times more expensive than retaining an existing one.
What is a good net revenue retention rate for SaaS?
Above 100% means expansion from existing customers outweighs churn and downgrades. For context, the 2024 KeyBanc Capital Markets and Sapphire Ventures survey of more than 100 private SaaS companies reported net retention of roughly 101% and gross retention of roughly 90%, both described as relatively consistent. A company above that net figure is growing its existing revenue base before counting any new customers.
What is a marketplace take rate?
Take rate is the share of transaction volume a marketplace keeps as its own revenue. Etsy, for example, defines revenue take rate in its earnings releases as revenue divided by gross merchandise sales. Gross merchandise volume counts the full value of goods sold, including the money that goes to sellers, so it overstates platform revenue. That is why the author pairs GMV with take rate.
What is a good LTV to CAC ratio?
Investor David Skok's SaaS Metrics 2.0 guidance sets LTV above 3 times CAC as a benchmark, assuming gross margins of 80% or more, and calculates LTV on gross margin. The author adds that a 3:1 ratio only means something once the LTV time horizon is defined and held constant, so the ratio compares the same window from period to period.
What is a good CAC payback period?
There is no universal number, which is why the author says marketing and finance should agree on it. Investor David Skok's original guideline of under 12 months dates from 2011. His updated notes say under 12 months is very rare in practice and around 20 months can work for enterprise businesses with a land and expand model. These are SaaS guidelines. The 2024 KeyBanc and Sapphire survey estimated median fully loaded payback at 20 months.
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