🧠📈The Only 3 Metrics That Actually Predict Growth...

Hey there,

Welcome back to another edition of Bootstrapped Growth. 👋 

Today, let’s cut through the noise of vanity metrics and focus on numbers that truly forecast growth.

Table of Contents

• 🚀 Strategy

• ⭐️ Extra Tips

• 🛠️ Resources

Thanks for reading. Let’s jump in!

🚀 Only 3 Metrics Matter

The only metrics that matter are the ones that directly impact improving future revenue. The 3 metrics below are leading (versus lagging).

They help predict what will happen to revenue versus simply measuring the past.

1) Customer Activation Rate - Do New Customers Find Value Quickly?

To calculate customer activation rate, divide the number of users who completed a defined ‘activity’ by the total number of new user signups.

Stripe found that users who process a real payment within 7 days are 3x more likely to become long-term customers. So, Stripe redesigned their onboarding to prioritize this single action.

Takeaway ➡️ Define your product's ‘aha moment’. Measure the percentage of new users who reach it within a timeframe. This predicts future revenue better than sign-ups.

2) Net Revenue Retention (NRR) - Do Existing Customers Spend More?

NRR is the percentage of revenue retained from existing customers at the start of a period after factoring in expansion revenue (upsells) and churn.

Datadog (cloud monitoring as a service) achieved 130%+ NRR through product expansion. Datadog releases new monitoring tools that are naturally adopted as infrastructure needs grow.

Takeaway ➡️ NRR above 100% indicates expansion within accounts, measuring your product or service’s ‘stickiness’. Target 120%+ for SaaS, 110%+ for consumer subscriptions.

3) Revenue Efficiency Rate - Is Growth Happening Efficiently?

Calculation: Revenue Efficiency Rate = Total Revenue / Sales and Marketing Expenses

MongoDB achieves high efficiency by targeting developers directly. Their self-serve model and developer evangelism create viral adoption with minimal sales costs.

Takeaway ➡️ Keep revenue efficiency between 75% to 100% to ensure that your sales & marketing team remains cost-effective.

⭐️ The Compounding Effect Of These Metrics

The 3 metrics discussed above work together. Improving one typically improves the others.

This can be illustrated by Zoom’s viral growth:

• Activation: Users hosted their first meeting within 24 hours

• NRR: Meeting participants becoming hosts

• Efficiency: Viral spread without sales touch

🛠 Useful Resources

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