The Hidden Pitfalls of Vanity Metrics in SaaS: What Really Drives Growth
When I first started building SaaS, I was obsessed with metrics. I tracked everything—monthly active users, signup rates, feature adoption, NPS scores. My dashboards looked impressive, and it felt like I was making progress. But when it came to revenue? Nothing.
It took me a while to realize that some metrics look great on paper but don’t actually contribute to sustainable growth. If you're running a SaaS business (or planning to), here are some of the most misleading vanity metrics—and what you should focus on instead.
1. Signups vs. Paying Customers
Why it looks good: Seeing a spike in signups is exciting. It makes you think your product is gaining traction and that growth is happening.
Why it’s misleading: Signups mean nothing if they don’t convert into paying customers. Many SaaS founders celebrate 1,000 new signups without realizing that 950 of them never log in again.
What to track instead:
- Activation rate – The percentage of users who complete key actions that show they’re getting value (e.g., setting up an account, using a core feature).
- Trial-to-paid conversion rate – How many free trial users turn into paying customers?
- Customer acquisition cost (CAC) vs. lifetime value (LTV) – A high signup rate is useless if your CAC is higher than your LTV.
👉 Focus on: Getting signups that convert, not just signups.
2. Monthly Active Users (MAU) vs. Revenue-Driving Users
Why it looks good: High MAU makes it seem like your product is sticky and growing.
Why it’s misleading: Not all users are equal. If a majority of your active users are on a free plan, it doesn’t mean much for revenue. MAU can also be inflated by users who log in once and never return.
What to track instead:
- Engaged paying users – Users who not only use your product but also pay for it.
- Expansion revenue from existing customers – How many customers upgrade to higher tiers?
- Churn rate – If users are active but canceling, something is off.
👉 Focus on: Retaining and monetizing users, not just tracking activity.
3. Feature Adoption vs. Revenue Impact
Why it looks good: Seeing users interact with new features feels like a win.
Why it’s misleading: Not all features drive revenue. Many SaaS founders waste months building features that get used but don’t lead to conversions, upgrades, or retention.
What to track instead:
- Revenue impact per feature – Which features directly contribute to conversions or upsells?
- User feedback on features – Are people asking for this feature before you build it?
- Usage vs. churn correlation – Are users who engage with this feature staying longer and paying more?
👉 Focus on: Building features that impact revenue, not just engagement.
4. Social Media Followers vs. Actual Leads
Why it looks good: Having 50,000 followers on Twitter or LinkedIn makes it feel like you have a huge audience.
Why it’s misleading: Followers don’t pay the bills. Many SaaS founders focus on audience growth without a clear plan to convert them into customers.
What to track instead:
- Website traffic from social media – Are your posts driving visitors?
- Lead conversion rate – How many of those visitors actually sign up?
- Customer conversions from social – Are social leads turning into paying users?
👉 Focus on: Engagement that leads to sales, not just likes and follows.
5. Net Promoter Score (NPS) vs. Retention Rate
Why it looks good: A high NPS means people say they love your product.
Why it’s misleading: Customers might say they love your product but still leave. Actions speak louder than survey responses.
What to track instead:
- Retention rate – Are users staying long-term?
- Referral signups – Are satisfied users actually referring others?
- Customer support interactions – Happy users don’t need constant support.
👉 Focus on: Real retention, not just survey scores.
6. Funding Raised vs. Profitability
Why it looks good: Raising a big round of funding is a great PR story.
Why it’s misleading: Funding isn’t revenue. Many funded startups burn through cash without ever reaching profitability.
What to track instead:
- Profit margins – Can your SaaS survive without funding?
- Runway & burn rate – How long can you operate at your current spend?
- Revenue growth rate – Is your business self-sustaining?
👉 Focus on: Building a business that survives without constant funding.
Final Thoughts
Metrics are important, but the wrong ones can be dangerously misleading. In my early days, I wasted time tracking numbers that made me feel good but didn’t drive revenue.
If you’re building a SaaS, focus on: ✅ Conversion rates, not just signups
✅ Revenue-driving users, not just activity
✅ Features that boost revenue, not just engagement
✅ Lead conversions, not just social media stats
✅ Real retention, not just NPS scores
✅ Profitability, not just funding
Your business isn’t about looking good on paper. It’s about making money and creating real value. Track the right metrics, and your SaaS will grow the way it should.
What are the most useful SaaS metrics you track? Let’s discuss!