Editing Your SaaS Metrics Are Lying to You

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I sat in the board meeting watching the founder present his deck. The slides were a sea of green: MRR growing 15% month-over-month, CAC holding steady, churn at “industry-standard” levels. The investors were nodding, smiling. Another “successful” SaaS company on the path to unicorn status.
But I’d seen their bank account. They had three months of runway left.
This is the dirty secret of SaaS metrics: the standard numbers everyone tracks can be completely accurate yet utterly misleading. You’re measuring the symptoms, not the disease. You’re tracking the easy stuff while the business fundamentals crumble.
Here are the four metric lies that are probably hiding in your dashboard right now.

Lie #1: Your “Healthy” MRR Growth is a Mirage
Monthly Recurring Revenue looks great when it’s going up and to the right. But not all revenue growth is created equal.
The Vanity Metric: “We grew MRR by $50K this month!”
The Truth: Where did that growth come from?
* 		Did you acquire 500 new customers paying $100 each?
* 		Or did you upsell 10 existing enterprise clients by $5,000 each?
* 		Or did you change your pricing and force existing customers onto more expensive plans?
The Real Metric: Revenue Concentration Risk Calculate what percentage of your MRR comes from your top 1%, 5%, and 10% of customers. We worked with a company that was “growing” until we discovered that 60% of their MRR came from 3 enterprise clients. When one left, their growth story evaporated overnight.
The Fix: Track MRR growth by cohort and by source. New business vs. expansion vs. reactivation. If more than 30% of your MRR comes from your top 10 customers, you don’t have a scalable business — you have a consulting firm in disguise.

Lie #2: Your “Low” CAC is Actually Bankrupting You
Customer Acquisition Cost seems straightforward: total sales and marketing spend divided by new customers acquired. But this simplicity is deceptive.
The Vanity Metric: “Our CAC is only $150!”
The Truth: Are you counting:
* 		The founder’s time spent on sales calls?
* 		The equity you gave to that strategic BD hire?
* 		The infrastructure costs to support your free tier?
* 		The customer support burden for new customers?
The Real Metric: Fully Loaded CAC with Time-to-Recover We helped a company recalculate their CAC and discovered it was 3x higher than reported. Why? They weren’t accounting for:
* 		6 months of pre-sales engineering time
* 		Custom integrations that took 3 months to complete
* 		The 40% of customers who churned before they recovered their CAC
The Fix: Calculate CAC as: (All human costs + all tool costs + all overhead) / customers acquired. Then track Time-to-CAC-Recover: how many months until a customer’s lifetime value covers their fully-loaded CAC. If it’s more than 12 months, you’re playing with fire.

Lie #3: Your “Acceptable” Churn is Masking a Crisis
Everyone tracks overall churn rate. But a single churn number hides critical patterns.
The Vanity Metric: “Our monthly churn is only 2.5%!”
The Truth: Who is churning?
* 		New customers who signed up last month?
* 		Your highest-paying enterprise clients?
* 		Customers from a specific marketing channel?
* 		Users who never adopted your key features?
The Real Metric: Cohort Churn & Revenue Walk We analyzed a company with “low” 3% monthly churn. But when we looked closer, we found:
* 		Month 1–3 customers: 15% monthly churn
* 		Month 4–12 customers: 2% monthly churn
* 		Month 13+ customers: 0.5% monthly churn
They were bleeding new customers but the overall average looked fine because their older, stable base was balancing it out.
The Fix: Track churn by cohort, by customer segment, and by revenue tier. Calculate your “Revenue Walk”: starting with last month’s MRR, add new business, add expansion, subtract churn, subtract contraction. This shows you the real health of your revenue, not just the net number.

Lie #4: Your “Efficient” LTV:CAC Ratio is Fiction
The 3:1 LTV:CAC ratio is the golden rule of SaaS. But most companies calculate both numbers wrong.
The Vanity Metric: “Our LTV:CAC is 4:1!”
The Truth: How are you calculating LTV?
* 		Using unrealistic retention assumptions?
* 		Ignoring the cost of serving customers?
* 		Forgetting that expansion revenue has different economics?
The Real Metric: Margin-Adjusted LTV:CAC We recalculated LTV for a client who claimed 5:1 LTV:CAC. When we:
* 		Used actual cohort retention data instead of averages
* 		Subtracted the 25% cost of goods sold
* 		Accounted for the 15% support burden
* 		Used their actual discount rate
Their LTV:CAC dropped to 1.8:1 — dangerously close to unprofitable.
The Fix: LTV should be: (Gross Margin % × ARPA) ÷ Revenue Churn Rate. CAC should be fully loaded. And you should track this ratio by acquisition channel — some channels will have great ratios, others will be money pits.

The Honest Dashboard
We helped the “successful” company from the board meeting rebuild their metrics. Their new dashboard showed:
* 		MRR Concentration: 45% from top 10 customers (DANGER)
* 		Fully Loaded CAC: $4,200 (3x their reported number)
* 		CAC Recovery Time: 14 months (TOO LONG)
* 		New Customer Churn: 22% in first 90 days (CRISIS)
* 		Margin-Adjusted LTV:CAC: 1.4:1 (UNSUSTAINABLE)
It was ugly. But for the first time, they saw the truth. They stopped chasing unprofitable growth and focused on fixing their fundamentals.
Six months later, they had:
* 		Diversified their customer base
* 		Fixed their onboarding to reduce early churn
* 		Increased prices to improve unit economics
* 		Extended their runway to 18 months
Your metrics shouldn’t make you feel good. They should make you money. Stop celebrating the vanity metrics and start tracking the numbers that actually predict survival.
The truth might hurt, but bankruptcy hurts more.

Read the full article here: https://levelup.gitconnected.com/your-saas-metrics-are-lying-to-you-d8d19624f20f