Revenue Metrics That Matter

As a tech founder, you're drowning in data. Your dashboards are packed with numbers, but which metrics actually drive revenue decisions? After working with dozens of tech companies closing $500K-$2M deals, here are the metrics that separate successful scale-ups from those stuck in growth limbo.

The Foundation: Pipeline Health Metrics

1. Pipeline Velocity

This isn't just "time to close" - it's the speed at which deals move through each stage of your pipeline. Calculate it as: (Number of deals × Average deal size × Win rate) ÷ Sales cycle length.

2. Stage Conversion Rates

Track conversion rates between each stage, not just overall win rates. Enterprise deals often stall at specific stages - discovery to proposal (65%), proposal to negotiation (45%), negotiation to close (75%).

3. Pipeline Coverage Ratio

Your pipeline should be 3-4x your revenue target. For enterprise deals with 6-9 month cycles, this ratio becomes critical for predictable growth.

Revenue Quality Metrics

Customer Acquisition Cost (CAC) Payback

For enterprise SaaS, healthy CAC payback is 12-18 months. If you're beyond 24 months, your sales process needs optimization, not more leads.

Annual Contract Value (ACV) Trends

Track ACV by cohort, not just averages. Are new customers signing for higher values? Are existing customers expanding? This reveals product-market fit maturity.

The Predictability Stack

Bookings vs. Revenue Recognition

Bookings drive cash flow, revenue recognition drives valuations. Track both, but optimize for bookings predictability in growth phase.

Net Revenue Retention (NRR)

For businesses with expansion revenue, NRR above 110% indicates strong product-market fit. Below 100% signals churn issues that no amount of new sales will fix.

Sales Efficiency Score

Calculate quarterly: (New ACV + Expansion ACV) ÷ Sales & Marketing spend. Scores above 1.0 indicate efficient growth, below 0.5 suggests process problems.

What Not to Obsess Over

• Total addressable market (TAM): Investors care, revenue teams don't. Focus on serviceable available market.
• Vanity metrics: Website traffic, social media followers, email open rates - unless they directly correlate to pipeline creation.
• Perfect lead scoring: In enterprise sales, relationship quality beats algorithmic scoring every time.

Making Metrics Actionable

The best revenue metrics drive immediate action:

• If pipeline velocity drops 15%, investigate which stage is causing the bottleneck
• If CAC payback extends beyond 18 months, optimize your qualification process
• If stage conversion rates decline, your messaging or competitive positioning needs work

The companies that scale successfully don't have more metrics - they have better metrics discipline. They track fewer numbers, but track them religiously and act on the insights immediately.

Your revenue metrics should tell a story about your business health, not just your current performance. Make them count.