Everyone loves a big number. Startups as well as established businesses tend to boast with their growth metrics: pageviews, registered users, downloads, social following. The list goes on. Even though these metrics might be signs of traction, more often than not they’re just empty numbers. The danger that lies in vanity metrics is that they can skew your perception of reality. And with a skewed perception of your business, how are you supposed to make the right decisions that will enable you to take your business in the right direction?
Let’s take a look at exactly how dangerous vanity metrics can be.
What’s a vanity metric?
A vanity metric is a number that’s easy to manipulate and isn’t directly correlated to your business goals. The truth? These are just numbers that will make you feel good, but they serve no real purpose. For example, you’ve managed to acquire a big number of registered users on your site. Yay! That’s great. But what you really should be looking at is Cost per Acquisition (CPA) and user activity. How much did it cost you to get these users signed up? What kind of actions can you take in order to drive the cost down? What are these users doing on your site in relation to what you want them to do?
It all comes back to how much money you’re spending and how much you’re earning. Simple!
Steve Jobs’ reality distortion field
The term reality distortion field (RDF) was coined by Bud Tribble at Apple Computer in 1981. He used it to describe Steve Jobs’ presence and charisma and its effects on the people around him, in particular the people that worked for him.
‘In his presence, reality is malleable. He can convince anyone of practically anything.’ - Bud Tribble on Steve Jobs
Andy Hertzfeld, a member of the original Apple Macintosh team during the 1980’s, said that Steve Jobs had the ability to convince others to believe almost anything using a mix of his charm and charisma. This would create a distorted perception of tasks at hand for those that were subjects to his RDF, making them blind to the reality of the difficulties and challenges they would face.
So what does Steve Jobs’ reality distortion field and vanity metrics have in common? If you haven’t already, you’re about to get the idea.
Lights, camera, vanity metrics - The negative effect on your business
Besides his undeniable charisma, Steve Jobs’ reality distortion field has often been described as his biggest flaw - a double-edged sword that made him a control freak and rigid perfectionist. Elizabeth Holmes, another early Apple computer employee said, ‘It was dangerous to get caught in Steve’s distortion field, but it was what led him to actually be able to change reality.’
That’s exactly what vanity metrics will do. They will create a perception of your business that is not your reality. Say you’re an ecommerce business and you’ve reached one million signups. This number doesn’t mean anything if you’re not selling. Or if your average basket size is way below what it should be in order for you to be profitable. The numbers on the surface are never the ones that will tell you the truth about where your business is at.
Don’t look at the roses, dig through the dirt
We’re all swimming in a sea of data, and it’s hard not to get distracted by all the big, attractive numbers. The numbers that you’ll email over to your stakeholders telling them how well you’re doing. However, the novelty will wear off and reality will strike: no numbers - no matter how big - will take precedence over reality. So look at the numbers that will drive change, even if it’s hard to face them. Because the companies that do will be in a much better place and in a much better reality.
It’ll be worth it, we promise. What are your thoughts on growth metrics? Use the comments section below to share your thoughts and opinions. Liked this article? Try these next:
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- Running a data-driven company: Guest post by David White Broken Mirror designed by Kelcey Benne from the Noun Project Turtleneck (seen on Twitter, Facebook and LinkedIn) designed by Norbert Kucsera from the Noun Project