The KPIs that actually drive recurring revenue

Why measuring more isn't the answer, measuring better is.

When I ask teams what KPIs they track, the answer is often the same:"A lot."

Volumes. Revenue. Churn. CAC. CLV. CSAT. Leads. NPS. MRR. Traffic. Conversion rate. Social followers. App downloads.

It's all there. But here's the problem:

Not all KPIs are created equal - and too many can actually cloud your decision-making.

In a recurring revenue business, knowing what to track and why matters more than having an impressive dashboard.

KPIs = Your Growth Compass

If your vision is the destination (Blog 1), then your KPIs are the GPS.They tell you if you're moving in the right direction - and fast enough.

But only if you've chosen the right ones.

Common KPI traps I see

1. Too many KPIs, not enough insight

   Dashboards bursting with numbers, but no clear story.

   
   

2. Vanity metrics dominate

   Follower counts or impressions that make you feel good but don't influence revenue.

   
   

3. Mismatch between KPIs and objectives

   Teams hitting their own goals, while the business still misses the bigger picture.

   
   

4. Lagging metrics only

   Revenue, NPS or churn from last quarter - helpful, but not timely.

   
   

What makes a good KPI?

A good KPI in a recurring revenue business should:

• Be aligned to your vision or core commercial goal

• Be tied to a controllable input or key decision

• Help you predict future performance, not just describe the past

• Drive action across teams (not just reporting for reporting's sake)

  
  

A quick analogy

I compare KPIs to baking.

The recipe (your strategy) gives you direction. The oven (your business) delivers the result.But the KPIs are how you know if it's working in real time.If the cupcakes aren't rising or smell burnt, it doesn't matter what the final bake time says. This is the bit when my daughter is baking can find frustrating!

Your KPIs should help you intervene early - not just evaluate late.

6 Core KPIs that matter for recurring revenue businesses

Here are the KPIs I recommend most often - based on what actually drives sustainable growth:

1. Customer Acquisition Cost (CAC)

How much does it cost to acquire a new paying customer?

💡 Tip: Watch this monthly. If it's rising faster than customer value, sound the alarm early.

2. Customer Lifetime Value (CLV)

What is each customer worth over their full relationship with you?

💡 Tip: Calculate this by segment (e.g. channel, product, cohort). Some groups will be way more profitable than others.

3. Retention Rate / Churn

How many customers stay (or leave) over a given period?

💡 Tip: A 1% monthly churn rate might sound fine - until you realise it's 12% annually. Cohort analysis can show where things really go wrong.

4. Revenue per Customer (ARPU / ARPC)

Are your customers growing in value - or flatlining?

💡 Tip: This helps you spot whether you're upselling, cross-selling, or simply surviving.

5. Net Revenue Retention (NRR)

How much revenue do you retain and expand from existing customers, after accounting for churn and downgrades?

💡 Why it matters: NRR > 100% = healthy model. NRR < 100% = you're leaking value.

6. Leading Engagement Metrics

Are your customers doing the things that signal success?

💡 Examples:

• Completed onboarding steps

• Logged in / visited within 7 days

• Used core features more than once

• Opened key communications

These often predict whether someone will stay or churn - and give you time to act.

How to build a useful KPI set

1. Start with the business objective

Want to grow profit? Reduce churn? Enter a new market?Let that goal shape your KPI selection.

2. Balance leading & lagging indicators

Lagging = revenue, churn, CLVLeading = engagement, onboarding success, support requests

You need both - one shows you the outcome, the other shows you why.

3. Be brutal about relevance

If it doesn't guide action, remove it.If it's not reviewed regularly, remove it.If it's only tracked because it "always has been"... definitely remove it.

4. Align KPIs across teams

Avoid internal friction by ensuring everyone is rowing in the same direction.

💡 Example: Sales are measured on sign-ups. Customer success are measured on retention. Marketing are measured on leads or brand awareness metrics.If they're all optimising for different things, growth slows down. Align them under shared KPIs like NRR or CLV.

Real-world watch-out

In one business I supported, they had 47 KPIs on a weekly trading deck.Forty. Seven.Nobody read them all. Nobody acted on most.Once we cut it down to seven that truly mattered, performance improved. So did meeting length.

Good KPIs drive good decisions

Your KPIs are not just numbers on a dashboard. They're levers that shape behaviour, strategy and success.

Track what matters. Ignore what doesn't. Use them to steer the ship, not just analyse the wreckage.

What's the one KPI you trust most when making decisions?

Or... what's one you secretly wish your team would stop measuring?