What gives you a thrill when it comes to your business? Are you totally excited about your product, or do you love spending time with customers? Or maybe you’re a numbers nerd, and nothing gets you going like checking out your analytics and seeing all sorts of metrics skyrocketing – and hey, there’s nothing wrong with that! But before you get too worked up about things like how many visitors, subscribers, or followers you have, stop and think about what these numbers actually mean. Are they things that just make you feel good, or are they truly things you can act on to reach your business goals? In other words, are you focusing too much on what’s known as “vanity metrics”?
What Are Vanity Metrics?
Eric Ries introduced the term “vanity metrics” in his book, The Lean Startup, describing them as metrics that make you feel good, or that look good on paper, but that don’t actually do anything for your business: they’re not actionable to business health or business growth.
Ries also describes vanity metrics as dangerous. Why? Because they distract you: let’s say, for example, that you’re focused on the traffic your site is getting, but you’re not paying enough attention to getting the right traffic, which is more important. So if you’re focused on a vanity metric like traffic for the sake of traffic, you’ll be wasting your time on something that doesn’t matter all that much because:
- If you’ve had a big spike in traffic, for example, the spike on its own tells you nothing about why you’re getting more traffic – it could have been something you did, or some outside attention you received, so there’s no way of knowing how to replicate what’s working for you.
- It doesn’t ultimately matter how much traffic you get if you’re not seeing conversions; to put it more bluntly, traffic doesn’t make you money, only paying customers do!
Vanity metrics can ultimately lead you down the wrong path, and make you think that everything is great with your business, when, in fact, you should be tweaking certain strategies. So how do you know what metrics are more important?
Vanity Metrics Vs. Actionable Metrics
If vanity metrics are all glitter with no actual substance, the antidote to being sucked in by them is using actionable metrics, which are tied to the goals of your business. These metrics are specific, replicable, provide you with insights on how to make better decisions for your business, and, well, actionable. How do you know if you’re looking at an actionable metric? Well, business growth experts suggest you make sure your metrics can help you answer questions like the following:
- How do we gain or lose revenue?
- How do we gain or lose customers?
- Why are people coming to us?
In addition to using these questions to determine if the metrics you are using are actionable, you’ll also need to ask yourself what your business goals are – remember, actionable metrics are tied to your business’ specific goals, so one business’ actionable metric might not be as relevant to another business. Try using the SMART method to create goals that are:
For example, when it comes to marketing goals, think of it this way: improving social media visibility is a marketing goal, while social media engagement is a metric. Other examples of marketing goals might be things like:
- Improve brand awareness
- Improve content quality
- Improve SEO
- Having the right goals, with the right actionable metrics pointing the way to reaching those goals, will put you back on the right track and keep you from focusing too much on those feel-good vanity metrics. So let’s take a closer look at some examples of how you can replace these impressive but substance-free vanity metrics with more useful actionable metrics.
What to Focus On
Below are just some examples of some common vanity metrics and the more important actionable metrics that correspond to them; remember, your business might have different goals that require looking at different actionable metrics, or you might even want to look at both the vanity metrics and actionable metrics, depending on your aims. Consider the following vanity metrics versus their more goal-tied actionable metrics:
- Number of social media likes vs. number of social media referrals
- Number of social media followers vs. engagement rate
- Time on site vs. time on page or scroll depth
- Number of newsletter subscribers vs. email opt-in conversion rate or acquisition path
- Pageviews vs. social shares or bounce rate
- Number of customers acquired vs. customer acquisition cost
- Monthly recurring revenue vs. customer lifetime value
- Email opens vs. email clicks
- Free trial sign-ups vs. free trial usage
Focusing more on the above actionable metrics will help you to build a process for tracking the health of your business, not just the health of your website or your social media accounts. If you’re not sure where to start, pick out up to five actionable metrics, perhaps that focus on revenue, like customer acquisition cost, recurring revenues, or customer lifetime value, and use analytics tools to see if your numbers are aligning with your goals. Then add in other metrics to get a fuller picture of how your customers are getting to you, how engaged they are with you, and how you can improve in all aspects of the health of your business and its online presence.
You’ve only got so much time, energy, and money to put into your business, right? That means you don’t have time to waste focusing on things that make you feel good, but aren’t necessarily telling you anything about your business, or helping you to grow or get closer to your goals. Don’t get sucked into a false sense of security – or success – or you could end up hurting your business; instead, take the vanity metrics with a grain of salt, and invest your precious resources in actionable metrics that will help you make the best decisions for your business that you can.