I like to say metrics of any sort are designed to answer one specific question about your business (I say this a lot, a lot a lot, maybe too often), and you track them so that you like the answers.
Well vanity metrics either don’t answer a question, don’t answer a needed question, or you can’t make positive changes to like the answer.
While tracking actionable metrics gives you instant feedback about how your decision making is affecting your business processes, vanity metrics do not provide useful feedback.
In this article, I go over 7 of the vanity metrics that you’ve probably been using and should stop using now.
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Just look at the beautiful Control Center with all of its actionable metrics. This is real data from an Open Startups company:
Vanity metrics are so named because they make you look good instead of be good. From the outside, they look like they have meaning, but they do not hold up to deeper scrutiny.
While the metrics you should be tracking allow you to monitor the results of your business decisions, vanity metrics might not be related to your business decisions at all.
At best, vanity metrics are a distraction for your teams. At worst, vanity metrics provide cover for poor decisions.
Vanity metrics are superficial measurements of your company’s success. They are often easier to improve than actionable metrics or should improve automatically from inertia and do not reflect any new activities.
Actionable metrics are well-defined and proven measurements that provide valuable insights into your business objectives. They improve based on genuine positive activity. The feedback provided by actionable metrics gives clear guidelines on improving the metric and, therefore, your company.
Otherwise, there’s a chance they will wind up working hard but accomplishing nothing. That’s why you need a way to identify vanity metrics and switch teams to actionable ones instead.
Here are some of the obvious characteristics of a vanity metric:
It doesn’t provide needed answers.
It is easy to measure.
It isn’t presented in context.
It is often misleading.
It improves or worsens independently of the team or company.
Now that you know the telltale signs of a vanity metrics, consider the following three questions to identify whether your company is relying on them.
This is the first question you need to answer. An actionable metric will provide you with a course of action.
For example, the net revenue retention rate (NRR) can tell you at a glance whether you are spending enough time marketing to current customers.
If your NRR is above 110%, you gain enough added MRR from current customers monthly. Otherwise, you may need to work more on upselling.
If your team is tracking a metric that doesn’t give them obvious assistance in decision making, then ditch that vanity metric for an actionable one.
If a metric improves or worsens by chance instead of by methodical changes, that’s an example of a vanity metric.
For example, while a solid content marketing team can influence the number of visitors to your page, it can also be caused by a random share by an influencer.
That’s why your content writers should focus on metrics that tell you how many targeted audience members visit your page.
There’s nothing more important than reliability when it comes to your data. If your data isn’t accurate, then how can you expect it to provide accurate metrics?
That’s why you should be searching for metrics that can be calculated using reliable data sources.
For example, growth metrics can be calculated using data pulled right from your payment processors. Payment processors provide highly reliable data, and therefore you can be confident in the metrics using that data.
It can be challenging to discern vanity metrics from actionable ones. Once you settle on the key actionable growth metrics, you must track them diligently. That means using the most accurate data possible.
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The quick ratio is one of the best metrics you can use:
Now that we know how to identify vanity metrics and why you should find actionable ones instead, let’s examine seven specific vanity metrics you should stop tracking today.
Nobody is arguing that pageviews are bad, but that’s not the mark of a vanity metric. It isn’t enough to say “x is good, so let’s base our decisions on x”.
Since not every pageview has the same value, and focusing on the wrong ones can be detrimental to the company, you should avoid using pageviews as a metric to track the value of your content.
You want the visitors who are interested in your product. Those visitors are more likely to give you their information, sign up for your free trial, and ultimately become paying customers.
So, what is a better metric? Instead, you could track the number of leads or your lead conversion rate or trial conversion rate. Alternatively, you could track the click through rate of your calls to action.
This is the perfect vanity metric. It only goes up, and it doesn’t provide anything actionable.
Although getting more and more customers is the goal in business, it is easier said than done. It is also accomplished indirectly by improving your funnel.
Instead, consider tracking customer churn or your customer lifetime. These can help you earn more from each customer.
This has the same problem as the running total of customers—it can only go up and it isn’t actionable.
Instead of tracking your total purchases or downloads, consider tracking your SaaS quick ratio, which tells you how well your company is bringing on new customers relative to the churn of old ones.
Since the quick ratio can be improved in two ways, by increasing sales or decreasing churn, it gives your marketing, sales, and customer service teams a good representation of their activities.
This vanity metric tricks companies, hobbyists, and individuals. Having a massive follower count is so valued that many influencer contracts are based on it—even when those followers are purchased bots!
While many people would say the actionable counterpart to this is engagement numbers, that might not be accurate either—engagement can also be purchased after all.
So, what should you track instead of social media followers? I personally like counting the click-through rate here, too. If my shares get people to click the link on one of my Instagram profile pages, then I know they are at least interested in my message enough to see what I am doing with my pages.
It is hard to influence the total numbers of some metrics, but you can influence the percentages. That makes them vanity metrics for failing the second question above.
While the number of conversions—visitors to leads, leads to opportunities, opportunities to wins, etc.—can fluctuate over time, you should be able to provide higher conversion rates by improving your inbound marketing plan.
Month on the month, you should be able to get better visitors, which means more leads.
Similarly, month on month you should be able to better engage with your leads, leading to more opportunities and wins.
Having more and more people on your email subscriber list is nice, but a lot of those subscribers are going to be bots, fake email addresses, or a random email address.
Now that there are so many great emailing tools out there, consider keeping track of the improvement in open rates or click through rates instead.
Hypothetically, your company should be growing exponentially. The first dollar of MRR can be harder than the next $100, which is probably going to be harder than the following $1,000, and that’ll be harder than the next $10,000, and on it goes forever.
Keeping track of the number of new users gained per day is a way to be satisfied by a linear growth.
Instead, consider your LTV to CAC ratio, which will tell you whether you are getting those new customers for less and less money.
All business metrics should answer a meaningful question about your business. If they don’t, it is time to start tracking actionable metrics instead of vanity metrics.
That’s where Baremetrics comes in.
Baremetrics is a business metrics tool that provides 26 metrics about your business, such as MRR, ARR, LTV, total customers, and more.
Baremetrics integrates directly with payment processors, including Stripe, so information about your customers is automatically and in real-time piped into the Baremetrics dashboards.
Sign up for the Baremetrics free trial, and start monitoring your subscription revenue accurately and easily.