Hierarchy of KPIs and Metrics

Understanding the signal from the noise is a challenge for organizations drowning in data. If your company isn’t data-driven yet, how do you decide what to prioritize tracking? In B2B SaaS, focusing on the right metrics can make the difference between strategic growth and wasted effort. Start with a hierarchy of what matters most and work your way down.

This framework outlines five types of metrics for a company prioritizing growth over profitability. While not exhaustive, it offers a sample structure to help guide your focus and align your teams.

What Matters Most?

Priority: Growth

If growth is your priority, measure your ARR growth over time. Up and to the right! Hockey stick growth! It doesn’t matter if underlying metrics like pipeline creation are strong if your ARR growth is stagnant or declining. Every team should be aligned on one question: how does ARR grow?

Key Metric:

  • ARR (Annual Recurring Revenue)

Key Drivers

Key Drivers are the supporting metrics that indicate how well you're growing and in what areas. For example, strong New ARR with poor NRR will cancel each other out; you can’t out-grow low retention.

Metrics:

  • New ARR: Total new ARR sold

  • Net Retention Rate (NRR): Growth of existing customers' ARR at the end of the period compared to the start

Core Metrics

Core Metrics dive into the composition of your Key Drivers, giving insight into what’s fueling ARR growth.

Metrics:

  • New Business ARR: ARR sold to new customers

  • Expansion ARR: ARR from upsells or cross-sells to existing customers. Also includes price increases.

  • Gross Renewal Rate: Percentage of ARR retained from existing customers, excluding upgrades or expansions

Operational Indicators

Operational Indicators give an inside look at how well your team executes the processes that impact your Core Metrics.

Metrics:

  • Pipeline Coverage: Ratio of pipeline value to quota or revenue targets left to get.

  • Pipeline Velocity: A measure pipeline conversion and volume. 

    • (# of Opps * Avg Deal Size * Win Rate) / Sales Cycle Length

  • Customer Health: Diagnostic view of customer satisfaction, usage data and engagement

  • Time to First Value: Time it takes for a customer to experience initial value from your solution

  • Mean Time to Resolution: Average time to resolve customer support cases

Levers

Levers are the tactical metrics you can influence more directly and often leading indicators that impact higher-level metrics.

Metrics:

  • Conversion Rates: Track various conversion points (ex: MQL > SQL > Closed Won or Win Rate) to identify bottlenecks

  • Lead Volume: Measure lead counts by source or channel to assess marketing effectiveness

  • Average Sales Price (ASP): Monitor ASP to understand pricing strategies, discounting and market shifts

  • Utilization: Measure how well your Professional Services (PS) team is used across customers

  • PS Attach Rates: Percentage of deals that include services (typically focused on New Logo lands)

  • Activity Metrics: Calls, emails, meetings — useful for tracking effort, but remember, volume doesn’t equal quality

Wrapping it up

By thoughtfully structuring your approach to data and understanding the interplay between key metrics, you can cut through the noise and focus on what truly drives growth. A dashboard overloaded with metrics makes it hard to see what matters. Instead, leverage the RevOps Hierarchy of KPIs and Metrics to understand the relationships between numbers, diagnose changes in Core Metrics or Key Drivers, and make strategic decisions that move the needle for your business.

Let us help you take your business to the next level. Reach out today!