Ask many SaaS leaders how the business is doing, and you’ll get a number. NPS. Net revenue retention. Maybe the Rule of 40. One figure, offered as a verdict on the health of the whole company.
It’s an understandable habit — but a dangerous way to steer, because no single metric is complete enough to make a growth decision on. And growth decisions are exactly the ones you can’t afford to get wrong right now.
The popular narrative says SaaS is in trouble because of AI. The reality is more complicated. As operator and author Matt Blumberg has argued, the pressure on SaaS is multi-causal — AI, yes, but also overbuilt stacks, nimble competitors, and buyers consolidating what they own.
But underneath the multi-causal story is a simpler one: the companies under most pressure often weren’t listening to what the market was telling them — because they were watching one number instead of the whole picture. Too many companies are trying to make complex growth decisions from a single signal. And single signals mislead.
The trap isn’t NPS. It’s the number of one.
NPS gets a lot of criticism, and I’m not here to add to the pile — used well, as one input among several, it has a place. The problem was never the question or the scale. The problem is treating any one metric as the answer.
Because here’s what a single number can’t do: it can’t tell you why. NPS tells you how customers felt when you asked. It doesn’t tell you what they’re about to do, or why, or what to change. Net revenue retention tells you what already happened to your revenue base. It doesn’t tell you what’s coming. Steer by one of these, and you’re making forward-looking decisions from the back seat — or from a single, narrow slice when you need the whole pie.
The alternative isn’t a better single metric. It’s convergence.
SaaS growth signals are trustworthy when they converge
A real read on where the business is going comes from reading signals together, across the different layers of the company — and seeing where they agree.
Think about the layers:
- Product signals: usage velocity, feature adoption, time-to-value, sustained engagement.
- Customer signals: what they tell you in surveys, in support tickets, in the open-text “one thing we could improve” — and what your frontline teams hear directly.
- Commercial signals: sales-cycle length, win rates, expansion and contraction patterns.
- Financial signals: net revenue retention, gross margin, churn, the Rule of 40.
No one of these is the truth. But when they converge — when product usage is climbing, customers are telling you the same story, deals are closing faster, and retention is holding — you have a growth signal you can trust and act on.
And when they diverge, that contradiction is the most valuable thing in the room. When NPS looks healthy, but usage velocity is quietly dropping, and expansion revenue is softening, the divergence is telling you something a single metric would have hidden completely. The disagreement between signals is often where the real insight lives. Most organizations smooth it over or ignore it. The good ones chase it.
Read the leading signals to act. Read the lagging ones to validate.
Here’s the distinction that makes convergence actionable — and the one most companies get backwards.
Some SaaS growth signals lead. They move first: product usage, feature adoption, shrinking or stretching time-to-value, engagement trends, shifts in sales-cycle length, the friction showing up in support. These are the early warnings and the early opportunities. They move months before the outcome does.
Other SaaS growth signals lag. They confirm: net revenue retention, churn, expansion revenue, win rates, gross margin, the Rule of 40. These tell you how you did.
The mistake is waiting for the lagging signals to move before acting. By the time churn ticks up or NRR softens, the decision window has often closed — the leading signals were flashing months earlier. You make the growth decision on the leading signals converging, and you let the lagging signals validate that the call was right. Not the other way around. Acting on the early signals with confidence, and being proven right later, is a very different posture from waiting for proof and reacting late.
It’s worth noting that even the metrics we treat as summary verdicts are really convergence in disguise. The Rule of 40 — revenue growth rate plus free cash flow margin, with a target of at least 40% — exists precisely because growth orprofitability alone will mislead you. As Dave Kellogg has pointed out, more than half of public SaaS companies aren’t actually Rule of 40 compliant; the median score sits around 31%. And his sharper point is that reading it as a static pass/fail — “are we compliant?” — is the wrong question. It’s a trajectory, not a verdict. Even your most trusted single number wants to be read in context, over time, alongside everything else.
Why this is really an operating-model problem
If convergence is the answer, why don’t more companies do it?
Because the signals don’t live in one place. Product usage sits with the product team. Support friction sits with CS. Win rates and sales-cycle data sit with the revenue team. NRR and margin sit with finance. Each team watches its own number, in its own system, measured in its own language.
So convergence isn’t a dashboard problem you solve by buying another analytics tool. It’s an organizational design problem. Whether your signals reach a decision-maker as one coherent picture — or arrive fragmented, late, and contradictory — depends entirely on how the organization is set up: who owns which signal, how those signals flow, and whether anyone is accountable for assembling the whole view before a growth decision gets made.
In most companies, no one owns that. Everyone owns a metric. No one owns the convergence. And so growth decisions default, quietly, to whichever single number is the loudest.
That’s the real fix. Not a better metric, and not a better tool. A deliberate decision about how signals come together — and who’s responsible for reading them as one picture — before the call gets made.
Stop steering by one number
The companies that navigate the next few years well won’t be the ones with the best single metric or the most powerful analytics platform. They’ll be the ones who stopped asking “what’s our NPS?” or “what’s our retention number?” as if either answered the question — and started asking whether their signals converge, what the leading ones are telling them now, and whether the organization is even built to bring those signals together.
Because a single number can tell you where you’ve been. Only convergence can tell you where you’re going.
No comments yet.