Key performance indicators are only useful if they are genuinely key—if tracking them changes decisions. A business tracking 50 KPIs is not tracking 50 key things; it is tracking things without discrimination. The discipline is identifying the five to eight metrics that, if moved, would materially change the trajectory of your business.
Revenue and Growth Metrics
Monthly recurring revenue (MRR) or monthly revenue, revenue growth rate month-over-month, and revenue by product or customer segment are the core revenue metrics. For businesses with long sales cycles, pipeline value and conversion rate by stage should also be tracked.
Unit Economics
Customer acquisition cost (CAC), customer lifetime value (LTV), LTV/CAC ratio, and gross margin by product or service are the unit economics metrics that tell you whether growth is worth pursuing. A business with LTV/CAC below 3:1 is burning money on growth; above 5:1 is leaving growth on the table.
Key Takeaways
- Five to eight truly key metrics beat a 50-metric dashboard that no one uses to make decisions.
- Unit economics (CAC, LTV, LTV/CAC, gross margin) determine whether growth creates or destroys value.
- Review KPIs weekly with your team—metrics that are only reviewed monthly react too slowly to problems.
