Level 1 Metrics, also known as 📝Vital Signs, are the minimal set of metrics needed to forecast a business, forming the top level of the 📝Instrumentation Pyramid.
Because they are chosen to forecast the business rather than to run it, Level 1 metrics necessarily exclude many of the metrics used to run the business; those are captured in Level 2 metrics. A simple test tells the two apart: Level 1 metrics care about churn rate, while Level 2 metrics care about quality of service. The aim is to use the least amount of information that forecasts the business most accurately.
In a direct-to-consumer business, the Level 1 metrics are ad spend, web traffic, conversion rate, average order value, repeat purchase rate, product margin, and gross margin, from which the 📝LTV:CAC ratio can be calculated. In a subscription business they include web traffic, conversion rate, new, lost, and active customers, churn rate, ad spend, and customer acquisition cost. These metrics drive the forecast in an 📝Integrated Financial Model (IFM) and fill the left-hand table of 📝Monday Morning Metrics (MMM), which shows where each metric comes from and links to its Level 2 breakdown.