When Good Metrics Mislead: Why Most Subscription KPIs Are Noise

Founders love metrics but too often, even strong numbers lead to weak decisions.

Almost all founders we've worked with are deeply data-driven. But there’s a difference between knowing your metrics, and knowing how to weave them into high-impact strategies.

Most businesses we work with track the usual suspects for a subscription business: CAC, AOV, subscription adoption rates, retention, LTV. The key issue here is that metrics can be deceiving without the right strategic context, or at the very least, fail to move the needle.

Here, we’re looking at how founders misuse KPIs, with a focus on subscription businesses, and how strategic finance can put you on the path to operational clarity and sustainable, profitable growth.

Why Investors Love Chewy (and Not Bark): The Subscription Metrics That Matter

Chewy and Bark both operate in the fast-growing pet e-commerce space. At first glance, both look like top performers, and like Bark has an edge: strong LTV to CAC ratios, high subscription adoption, low customer churn, and marketing spend levels that appear efficient.

You could list ten more KPIs and still walk away thinking both businesses are top performers. But the truth is, not all metrics tell the full story. What these metrics don’t tell you:

• Do customers stick around and keep spending?

• Do they spend more or less over time?

• Are past marketing dollars still generating revenue or do you have to keep spending just to stay in place?

  
  

This is an example where focusing on one or two metrics tells you all you need to know. Net Revenue Retention (NRR) is a powerful, compound metric that shows two important things that customer retention and LTV don’t:

• Cohort Expansion: Are those same customers spending more?

• Revenue Impact of Churn: Is lost revenue from departing customers being replaced (or exceeded) by revenue from those who stay?

An NRR over 100% means your existing customers are driving growth on their own. An NRR below 100% means you're leaking revenue, and marketing spend is plugging holes, not fueling growth.

When you pair NRR with a dynamic look at your Marketing Efficiency Ratio (MER), which tells you how much revenue you're generating for every marketing dollar, you start to get a much clearer picture of long-term efficiency and sustainability.

Chewy checks both boxes. Its MER is around 15x, meaning it generates $15 in revenue for every $1 in marketing. And its NRR has consistently exceeded 100% for every single customer cohort since 2011. That means customers don’t just stick, they spend more over time. Past acquisition spend keeps compounding, and the revenue engine gets more efficient as the business scales.

Bark, on the other hand, has seen its MER fall from 8x to 6x over the past year, signaling that marketing is becoming less effective. They don’t disclose NRR directly, but we can make some educated guesses. Orders per customer dropped from 14 to 12, and the company stopped reporting churn and cohort spend altogether, usually a sign that those numbers aren’t trending the right way.

That points to an NRR below 100%. In other words, the existing customer base is shrinking in value, not expanding, which forces companies to keep spending just to hold revenue steady.

So while LTV/CAC, churn, and subscription rates may look strong, they can be deceiving, especially if they ignore the full customer revenue arc. The metrics that matter most are the ones that show whether your growth is efficient and durable. Everything else is noise.

At the time of writing, Chewy was trading at an EV/EBITDA multiple of 57x. Bark had last reported negative EBITDA and was trading at less than 0.5x Revenues.

Common Subscription KPI Missteps

Poor KPI habits can quietly drag down even the most ambitious and hardworking teams. When financial or operational problems arise, they’re rarely related to not tracking enough KPIs. They almost always boil down to: 

• Failing to set and track priorities; 

• Applying the wrong context; 

• Missing the bigger picture.

  
  

1. Tracking everything, prioritizing nothing

Founders love dashboards, and for good reason. KPI dashboards help leadership teams surface a huge amount of information quickly. But they also make it easy to fall into a trap where you’re tracking 40 KPIs without focus.

Real financial clarity comes when you prioritize the handful of KPIs that directly connect to your growth phase, customer model, and goals.

2. Using “best practice” benchmarks that don’t fit

Many subscription founders fall into the trap of chasing broad industry benchmarks without tailoring them to their product category, sales channel, or customer type.

We’ve seen early-stage teams stress over churn benchmarks designed for consumables businesses, when they’re selling premium apparel with completely different customer behaviour. Or measuring CAC against businesses with very different AOVs and margins. 

The result? Distracted teams, misaligned goals, and wasted capital. 

Rather than defaulting to "best practice" metrics, strong operators focus on "best-for-us" benchmarks, grounded in their real customer dynamics.

3. Measuring KPIs in isolation

It’s easy to look at LTV without segmenting by acquisition cohort. But that can lead to dangerously misleading conclusions.

One business we worked with saw a strong average LTV at first glance. When we broke it down, we found the number was skewed by a small group of heavily discounted customers who made large initial purchases but didn’t stick around. Meanwhile, the core target audience, the ones they actually wanted to grow, had lower retention and smaller order sizes.

Without that deeper look, the company would’ve scaled the wrong playbook. The average LTV looked great, but it was inflated by outliers, not representative of sustainable growth.

Metrics don’t live in silos. If you don’t connect the dots, you’re just chasing noise.

The KPIs That Actually Matter When They Matter

When it comes to subscription KPIs, context determines what “good” looks like. Here’s how we encourage founders to think about KPI priorities depending on where the business is: 

• During fundraising: Focus on CAC payback, 90-day cohort retention, gross margin and core subscriber growth.  

• During uncertainty: Prioritize contribution margin, monthly churn trends, and operating cash flow.  

• During growth planning: Model LTV expansion, churn sensitivity, and CAC payback under different marketing mixes and product configurations. 

  
  

  Knowing which KPIs to track is step one. Making them actionable and layering them into business decisions is where strategic finance comes in.

How Strategic Finance Looks Inside a Subscription E-Commerce Business

Strategic finance isn’t a scorekeeper role. It’s an operating system for sharper, faster, better decisions. 

The best finance partners help subscription founders:  

• Pressure-test acquisition and retention assumptions  

• Translate CAC and churn into cash flow and margin plans  

• Justify pricing strategies with real cohort data  

• Set KPI frameworks that evolve as the business scales.

Not every metric tells you what matters. Some just make you feel good.

If your growth depends on repeat purchases, you need to know not just who’s buying, but who’s staying, who’s spending more, and how much it’s costing you to keep that revenue.

When we work with subscription businesses, our job isn’t just to track KPIs. It’s to help you understand what they’re really saying and what to do next.