The Growth Metrics That Actually Matter
Signups and page views go up and to the right even when a company is dying. Here are the three numbers we actually watch.
Most dashboards lie
Signups, page views, and total registered users all go up and to the right even when a company is quietly dying. We call them vanity metrics because they flatter you without telling you anything true.
The three we actually watch
We cut our dashboard down to three numbers that genuinely predict revenue.
Activation = users who hit the aha moment / total signups
Retention = users active in week 4 / users active in week 1
Payback = CAC / (monthly gross margin per account)If activation is low, the product is confusing. If retention decays to zero, you have a leaky bucket and no amount of marketing spend will ever fill it.
A worked example
Say you spend $6,000 to acquire 200 users. Forty of them activate, and each pays $50 per month at 80% gross margin.
CAC per activated user = 6000 / 40 = $150
Monthly gross margin = 50 * 0.80 = $40
Payback period = 150 / 40 = 3.75 monthsUnder twelve months of payback, growth pays for itself. Over eighteen, you are just renting revenue you can't keep.
Written by the founder
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