Startup Metrics That Matter: What to Track and Why

In the age of analytics, startups can measure almost everything. Dashboards proliferate, charts multiply, and founders drown in data without gaining clarity. We believe the solution isn't more metrics—it's focus on the metrics that actually matter for your stage and business model.

This article shares our framework for startup metrics based on building and advising multiple companies.

The Problem with Too Many Metrics

Tracking too many metrics causes several problems:

Diluted focus: When everything is measured, nothing is prioritized
Metric manipulation: With enough metrics, you can always find one moving in the right direction
Analysis paralysis: Data consumption replaces actual decision-making
Vanity metrics: Easy-to-measure metrics get attention even when they don't indicate business health

The One Metric That Matters (OMTM)

The Lean Analytics framework suggests focusing on "One Metric That Matters"—a single metric that reflects your current priority. This doesn't mean ignoring other metrics, but having a clear primary focus.

Your OMTM changes as your company evolves:

Problem validation: Qualitative—are people engaged by the problem?
Solution validation: Engagement—are early users actually using the product?
Growth: Acquisition—can you acquire customers efficiently?
Scaling: Revenue and retention—is the business model working?

Metrics for Different Business Models

SaaS Metrics

MRR (Monthly Recurring Revenue): The foundational SaaS metric. Track total MRR and its components—new, expansion, contraction, churn.

Net Revenue Retention (NRR): Revenue from existing customers compared to prior period, including expansions and churn. NRR over 100% means you're growing even without new customers.

CAC (Customer Acquisition Cost): Total sales and marketing costs divided by new customers acquired.

LTV (Customer Lifetime Value): Expected total revenue from a customer over their relationship with you.

LTV:CAC Ratio: How much value you create per dollar spent acquiring customers. Generally want 3:1 or higher.

Churn Rate: Percentage of customers (or revenue) lost in a period. For SMB SaaS, 5% monthly churn is problematic; for enterprise, even 1% monthly is high.

Marketplace Metrics

GMV (Gross Merchandise Value): Total transaction value flowing through the platform.

Take Rate: Your revenue as a percentage of GMV.

Liquidity: Percentage of listings that result in transactions in a given period.

Supply/Demand Balance: Are you supply-constrained or demand-constrained?

E-commerce Metrics

AOV (Average Order Value): Average revenue per order.

Purchase Frequency: How often customers buy.

ROAS (Return on Ad Spend): Revenue generated per dollar of advertising.

Contribution Margin: Revenue minus variable costs per order.

Universal Startup Metrics

Regardless of business model, some metrics matter for everyone:

Runway

Months of operation remaining at current burn rate. The most existential metric—if this hits zero, nothing else matters.

Burn Rate

Net cash outflow per month. Gross burn (total spending) and net burn (spending minus revenue) both matter.

Activation Rate

Percentage of new users who reach some meaningful value threshold. Definition varies by product—the key is identifying what separates engaged users from those who won't stick.

NPS (Net Promoter Score)

Would customers recommend you? Imperfect but useful as a simple indicator of customer satisfaction.

Avoiding Vanity Metrics

Vanity metrics are numbers that look impressive but don't indicate business health:

Total registered users: Without knowing active users, this is meaningless
Page views: Traffic without conversion or engagement context says little
Social followers: Unless you monetize through social, this rarely matters
Press mentions: Nice for ego, rarely correlates with business success

The test: does this metric inform a decision? If you can't articulate what you'd do differently based on the metric, it might be vanity.

Building a Metrics Dashboard

An effective startup dashboard has:

3-5 primary metrics that reflect current priorities
Clear definitions so everyone measures the same way
Trends over time rather than just current values
Cohort views where relevant (e.g., retention by signup month)
Targets so you know what good looks like

We recommend keeping the dashboard focused. You can have detailed analytics available for deep dives, but we've found the primary dashboard should be scannable in under a minute.

Metric Hygiene

Define Clearly

How exactly is each metric calculated? Document definitions so everyone measures consistently.

Review Regularly

Metrics need regular review—weekly for operational metrics, monthly for strategic ones.

Update as You Grow

The metrics that matter for a pre-product startup differ from those that matter for a scaling company. Evolve your dashboard as you evolve.

Question Anomalies

Sudden changes in metrics demand explanation. Don't just celebrate improvements or panic about declines—understand why.

Conclusion

The goal of startup metrics isn't comprehensive measurement—it's actionable insight. Focus on the few metrics that truly indicate business health and inform decisions. Everything else is noise.

We suggest starting with your One Metric That Matters, adding the 3-5 supporting metrics essential for your business model, and resisting the temptation to track everything that's trackable.