The Metrics That Matter: Choosing Your 3 Most Important Metrics

You have a dashboard with 47 metrics.

Revenue. CAC. LTV. Churn rate. Activation rate. Feature adoption. Email open rate. Cost per lead. Cost per acquisition. Demo conversion. Proposal conversion. Session length. Pages per session. Mobile conversion. Desktop conversion. Organic conversion. Paid conversion. Email conversion. Organic traffic. Paid traffic. Direct traffic. Referral traffic. And 25 more.

Every week, you look at the dashboard. Something has moved. You spend 3 hours investigating which metric matters.

By Friday, you’ve wasted 6 hours analyzing noise.

The problem isn’t that you’re analyzing too much. The problem is that you’re tracking too many things.

The solution is to identify your 3 most important metrics and ignore everything else.

Why 3 Metrics?

This isn’t arbitrary. There’s a reason 3 works:

1. You can hold them in your head

If you have 3 metrics, you remember them. You check them without opening a dashboard. You can explain them to anyone.

If you have 15 metrics, you forget half of them. You’re constantly looking at the list to remember what you track.

2. They’re not too specific

1 metric is too broad (just “revenue” doesn’t tell you enough).

10 metrics is too specific (you get lost in the weeds).

3 is the sweet spot. You get signal without noise.

3. They align your whole team

When everyone on your team knows “our 3 metrics are X, Y, and Z,” you eliminate arguments.

You’re not debating whether “feature adoption” or “session length” matters more. You’ve already decided. The whole team optimizes for X, Y, and Z.

4. They change your behavior

When you have 3 metrics, you make decisions differently.

Instead of “we should increase feature adoption because it’s low,” you ask: “Does increasing feature adoption move one of our 3 metrics?”

If it doesn’t, you don’t do it.

Choosing Your 3 Metrics

The metrics you choose depend on your business stage and model.

For an early-stage acquisition-focused company:

Metric 1: Customer Acquisition Cost (CAC)

Are you acquiring customers efficiently?
If CAC is going up, you’re in trouble.

Metric 2: Product Activation Rate (% of new users who complete key action)

Are customers actually using the product or just signing up?
If activation is declining, your product is losing appeal.

Metric 3: Revenue (MRR or monthly)

Is all this acquisition and activation turning into money?
This is the ultimate metric.

For a mature retention-focused company:

Metric 1: Net Revenue Retention (NRR)

Are your existing customers expanding or contracting?
NRR > 100% means you’re growing from existing customers alone.

Metric 2: Churn Rate

Are you losing customers faster than you’re acquiring them?
Increasing churn is a death signal.

Metric 3: Customer Lifetime Value (LTV)

How much is each customer worth long-term?
This tells you how much you can spend to acquire customers.

For a venture-funded growth company:

Metric 1: Growth Rate (month-over-month revenue growth)

How fast are you growing?
This matters more than profitability at this stage.

Metric 2: Burn Rate (cash spent per month)

How long until you run out of money?
Growth + burn rate together show your runway.

Metric 3: Unit Economics (LTV:CAC ratio)

Is your growth sustainable?
If LTV < 3x CAC, you’re on a treadmill.

For a profitability-focused company:

Metric 1: Profit Margin

What % of revenue becomes profit?
If margins are declining, you’re in trouble.

Metric 2: Cash Flow (cash in minus cash out)

Do you have the cash to pay bills?
Profit on paper doesn’t matter if you’re out of cash.

Metric 3: Customer Retention (or repeat purchase rate)

Are you keeping customers or just replacing them?
Retention is cheaper than acquisition.

How to Identify Your Specific 3 Metrics

Here’s the process we use:

Step 1: Ask what you’re trying to accomplish

Are you trying to:

Grow as fast as possible?
Build a sustainable, profitable business?
Maximize customer satisfaction?
Capture market share?

Your answer determines your metrics.

Step 2: List all the metrics that support that goal

If your goal is “sustainable growth,” you might list:

Revenue growth rate
CAC
LTV
Churn rate
Gross margin
CAC payback period

Step 3: Pick the 3 that are most predictive

If one metric predicts the others, you don’t need both.

Example: If churn rate is highly correlated with LTV (lower churn = higher LTV), maybe you only track churn. You don’t need both.

Example: If revenue growth always follows customer acquisition (you acquire customers, revenue follows), maybe you only track acquisition and skip revenue. You know revenue will follow.

Step 4: Test for a month

Run with those 3 metrics for a month. Every decision you make, ask: “Does this move one of our 3 metrics?”

If you’re constantly doing things that don’t move those metrics, maybe the metrics are wrong. Adjust.

What About the Other 47 Metrics?

You can still track them. But they go on a “diagnostic” list, not your main 3.

When one of your 3 main metrics moves, you investigate using the diagnostic metrics.

Example:

Main metrics: Revenue, CAC, Churn rate

This week: Revenue went down 15%.

Diagnostic investigation:

Is CAC up? (If yes, it’s an acquisition problem)
Is churn up? (If yes, it’s a retention problem)
Did something change with a big customer? (revenue concentration issue)
Is it seasonal? (expected variation)

You use the other 47 metrics to debug why your main 3 moved.

But you don’t optimize all 47. You optimize the 3.

The Mental Model: Leading vs. Lagging

When you choose your 3 metrics, ask: Are these leading or lagging?

Lagging metrics tell you what already happened. They’re accurate but too late to act on.

Revenue (happened last month)
Churn (customers already left)
Profit (results of all your decisions)

Leading metrics predict what will happen. They’re less precise but actionable.

CAC (predicts future revenue)
Activation rate (predicts future churn)
Pipeline value (predicts future revenue)

Ideally, your 3 include at least one leading metric (so you can act) and one lagging metric (so you know you’re right).

Example:

Leading: CAC (predicts revenue)
Lagging: Churn rate (confirms product quality)
Hybrid: Growth rate (current outcome of all your efforts)

The Danger of Metric Gaming

Once you pick your 3 metrics, be careful: Your team will optimize for them, sometimes in weird ways.

If your 3 metrics are:

CAC
Activation rate
Revenue

Your team might:

Lower CAC by acquiring lower-quality customers (metric improves, but revenue suffers)
Improve activation by only showing the easy onboarding path (metric improves, but feature adoption suffers)
Increase revenue by raising prices (metric improves, but churn increases)

To prevent this, define how each metric should improve.

Instead of just “CAC,” say “CAC while maintaining > 40% 6-month retention.”

Instead of just “activation,” say “activation within first 7 days.”

This prevents Pyrrhic victories where the metric improves but the business suffers.

Revisiting Your 3 Metrics

Every quarter, ask: Are these still the right 3?

Did your business model change? (Maybe you pivoted from acquisition to retention)
Did your goal change? (Maybe you’re now focused on profitability)
Did one metric become automatic? (Maybe CAC improved so much it’s no longer a constraint)

If the answer is yes to any, change the metrics. Your 3 metrics should reflect where your constraint is right now, not where it was 6 months ago.

The Takeaway

You’re drowning in data, not starving for it.

The problem isn’t that you don’t know enough. It’s that you know too much and can’t see the signal.

Pick 3 metrics that matter for your stage and goal. Optimize them relentlessly. Use everything else as diagnostic.

Your team will move faster. Your decisions will be clearer. Your business will be stronger.

We help you identify those 3 metrics and hold the line against metric proliferation.