The Top Metrics for Consumer Businesses

For tech enabled consumer companies, attention is the most valuable commodity. Unlike B2B businesses that lock in revenue with multi-year contracts, consumer businesses have to win - and re-win - user attention daily. It's a different game with different metrics.

As John Connolly, Managing Director at Spectrum Equity (and one of the sharpest consumer investors) told me on the RTN pod:

And that investor exodus? It’s a signal. While capital crowds into enterprise AI SaaS with 120%+ NRR, many fundamentally strong consumer companies are flying under the radar (and printing cash). As Connolly says:

I’m personally bullish on consumer. Look no further than Airbnb or Spotify: consumer juggernauts with durable moats, compounding brand equity, and fat profit margins at scale.

Let’s break down the metrics and key themes that actually matter when growing consumer companies. Whether you’re an operator trying to scale or an investor hunting for underpriced assets, this guide is a gold mine.

Along the way, we’ll draw real examples from the 10K’s and 10Q’s of:

And we’ll breakdown the following metrics and themes:

…Buckle up. Your walking straight into the teeth of 3,295 words on the levers for steering tech enabled consumer businesses.

What it is: The percentage of new users acquired through organic channels versus paid marketing.

Why it matters: Reliance on paid acquisition creates vulnerability to market changes and competitors with deeper pockets. You can only “spend your way into” a market for so long. Eventually all paid channels have diminishing returns.

Real-world examples of organic:

Investor perspective: John Connolly identifies this as perhaps the most critical metric:

In respect to a heavy reliance on paid acquisition:

What it is: The number of unique users who meaningfully engage with a product or service within a month.

Why it matters: MAUs represent the total addressable audience for monetization in any given period, and indicate overall platform health.

Real-world examples:

While MAU growth is celebrated in earnings calls, the metric alone doesn't tell the full story. It’s just the start. Pinterest's 11% MAU growth is solid but needs to be viewed alongside monetization metrics to understand true business health. The value of an active user is predicated on them taking some value demonstrative activity that eventually results in a purchasing action.

What it is: The number of unique users who meaningfully engage with a product or service within a day. Some products are fundamentally meant to be engaged with on a daily level.

Why it matters: DAUs indicate the stickiness of a product and how deeply it's integrated into users' daily routines.

Real-world examples:

The DAU/MAU ratio (often called "stickiness") is more revealing than either metric alone. Using the two in a ratio helps uncover the balance of true power users.

(Paid readers unlock 15 more deeply researched metric breakdowns below)