Are Vanity Metrics Running Your Decisions?

Published On:

Today businesses are collecting more data in one day than most did over a year in the past. But just having this data available to us means very little. Knowing how to use that data to make informed decisions that lead to growth is where the real power lies. Not all metrics are created equal, and knowing which ones to use could mean the difference between feeling successful and being successful.

Many business owners are obsessed with what I like to call “vanity metrics.” They are metrics that make you feel good but lack any real meaning. Vanity Metrics are very surface-level and typically actionless. These are metrics like the number of website visitors, keyword ranking, the number of likes, and so forth.

Now, these metrics alone aren’t worthless; they just aren’t the full picture. Let’s take website traffic, for instance. Many businesses or marketers will check the number of visitors, and if it goes up, they’d assume they are doing a good job. If it went down, they’d assume they need to change something. Most never ask the most important question, “Why?”

The problem with vanity metrics is you still end up making decisions based on assumptions instead of facts. Looking at your website traffic numbers going up and assuming you’re doing the right thing could be very misleading. If you take your traffic data and break it down, you will start to see what is really contributing to your growth and what is not. But traffic is still a hard metric on which to base business decisions.

When it comes to tracking what matters, you must start with “actionable metrics.”

Any time you start tracking a metric, ask yourself, “Will this help me take action and make decisions?” If the answer is no, don’t waste your time with it.

Kissmetrics has a great post on this topic, and they say, “Actionable metrics are geared to answer these questions:

  • How do you gain or lose revenue?
  • How do you gain or lose customers?
  • What are the key functions and benefits that people are coming to you for?”

    Having answers to these questions will help you understand what types of information you need to track and how it impacts your business. Below are three core metrics every business should track.

    Conversion Rates

    The first thing you want to track is conversions. The definition of conversion is “The point at which a recipient of a marketing message performs the desired action.” In short, it is the number of people who take a particular action you’ve set up. This could be a form fill or click on a specific element.

    Tracking website traffic will have more meaning if you also have conversion tracking set up. This will help you understand how your users are interacting with your site and if you need to make changes to your conversion points.

    In the Kissmetrics article referenced above, they also share a very good point about comparing. “Don’t compare yourself to the industry or your competitors. Your goal is to establish an internal benchmark. Then try to beat it. When you move the needle up, you’re on the right track. Otherwise, you’re either going backward or your efforts aren’t making any impact.” In short, your conversions are specific to your business. Don’t get bogged down by other people’s numbers. Set your own goals and optimize to the needs of your audience.

    Leads & Customers

    How does your business attract and retain customers? Which channels are the most effective for driving leads? What is the preferred way for your customers to interact with you?

    This is a little more in-depth than finding out from where your visitors come. Tracking leads and customers is about finding which referral sources are generating new business.

    Knowing which channels are generating the most leads and new customers will give you insights into where to focus more of your time and energy. For example, say you are driving a ton of traffic from social media, but none of your visitors are taking action. But when you look at organic traffic, you notice 15% of your visitors are converting into leads. Now you can focus more energy on organic traffic since it’s producing results. For your social audience, you can run some a/b tests to see if you can get that segment to engage.

    As you can see from this simple example, we now have actionable data rather than some numbers that are higher or lower than the last month.


    The last metric you need to track is also the most important, revenue. Without cash flow, you’re out of business. Every time someone makes a transaction with your company, you need to track it.

    Here are a few other revenue-based metrics you need to track:

    • Customer Lifetime Value
    • Total Revenue (Month, Quarter, Annual)
    • Net Profit
    • Average Order Value
    • Number of Transactions

    Having insight into your financial numbers will give you a baseline of the health of your business. The deeper you go, the more information you will glean from your research.

    While tracking your data is important, it’s what you track that makes the biggest impact. Instead of wasting time on vanity metrics that lack action, take the extra effort to dive into the numbers that matter to your business. Remember, actionable metrics are geared to answer these questions:

    • How do you gain or lose revenue?
    • How do you gain or lose customers?
    • What are the key functions and benefits that people are coming to you for?

    If you have questions about your data or would like some help setting up your data tracking, contact us today. We’ve helped a number of companies just like yours put their data into action.

    New call-to-action

About the Author: