“Vanity metrics are dangerous.” - Eric Ries, The Lean Startup
There is certainly a lot of truth to this statement but what if I told you it’s not that black and white? What if I told you that in some cases, sharing vanity metrics with your team isn’t that bad?
Shut the front door!
And what if I told you that vanity metrics can sometimes actually be used for good?
Shut every door in the house!
Rather than just make shocking statements, let me explain from the beginning:
What is a vanity metric?
Vanity metrics are feel-good data – they’ll make you all warm and fuzzy inside, but they don’t directly help you make decisions that will affect anything meaningful in your business.
They tend to be absolute numbers with little context or sense of causality. If you’re looking at a metric and you see it change over time, but you can’t easily figure out why it’s changed or what you can do to impact it directly, then you’ve probably got a vanity metric on your hands.
Some examples include:
- Total customers – This number will almost always increase over time. Without supporting metrics to show how much your customers are spending, how long they stay customers for and how much it cost to acquire them, focusing on this metric alone is unlikely to be valuable in and of itself.
- Downloads – A mobile app could get millions of downloads, but does anyone actually use it?
- Number of Twitter followers – You could have hundreds of thousands, but are they really engaged with your brand?
- Time on site – What does this actually mean? Looking at this alone, there’s little indication of how increasing time on site creates actual business value.
There are of course exceptions when it might make sense to look at these, and often it’s circumstances specific to your business that can determine whether a metric is a vanity metric or not. That’s why being able to identify a vanity metric is an important skill that’s worth refining over time.
“Vanity has some value, but now we’re always pushing to make our metrics immediately actionable. Big numbers like overall organic traffic were useful to look at when we were smaller, but as we’ve grown as a company we have become a lot better at knowing what’s actually important. Now we’re focused on much more granular metrics like organic traffic by week and organic traffic by page type.” - Mark Myers, Co-Founder and Chief Design Officer, G2 Crowd
At least Mark wasn’t focusing on clicks…
What is an actionable metric?
If vanity metrics are unhelpful and fail to drive business value, actionable metrics are much more likely to enable you to spot trends, realize problems, and help you make decisions that help you achieve your goals.
For example, a savvy manager might take the vanity metrics above and break them down into metrics that the team can actually impact with their work day-to-day:
Average order value instead of total customers – Understanding and monitoring the revenue generated by specific types of buyer will better inform you of where opportunities to optimize exist or where money is being left on the table.
Monthly Active Users instead of Downloads – Understanding how many downloaders of your app actually continue to use it is much more useful for understanding engagement.
CTR of social posts instead of number of Twitter followers - Is your activity actually generating useful traffic? Monitoring the conversion rate of social traffic to a revenue event would compliment this greatly.
Conversion rate of key pages instead of time on site – Can you optimise your content, page design or traffic sources to get more customers rather than simply having visitors spend more time on your pages?
Actionable metrics tend to be very specific and work best when focused on in small quantities – too many and their impact will be diluted.
So how can vanity metrics ever be useful?
Let’s be clear, a solid set of actionable metrics is the foundation of any good dashboard. But at the end of the day, dashboards (especially TV dashboards) are there to serve people. And because people have different expectations, mixed levels of interest in data and varied perspectives, devoting a little space on your dashboard to vanity metrics can go a long way.
In what ways can vanity metrics help?
- Getting your team engaged with your dashboard: Because of their feel-good-factor and often fast-moving nature, vanity metrics can be great for generating interest in a dashboard throughout the day, and therefore give added visibility to your other (hopefully) actionable metrics.
“It’s almost an emotional beginning. We all have a number we would be happy if it went up. At the heart of it, it’s that kind of emotional curiosity that motivates and keeps people engaged. Don’t necessarily start with the most important thing, don’t try to find the perfect metric. Think about what gives you an emotional reaction and it starts to get fun that way. Once it’s fun then it just starts rolling.” - Max Keeler, Chief Projects Officer, The Motley Fool
- Motivating people: Some metrics, like number of customers, can have a motivational effect, even if they aren’t actionable.
“In the lobby of our office we knowingly display some vanity metrics. Facebook Likes, for example, are largely non-actionable and don’t mean a lot day-to-day. But displaying that we have over 1 million followers shows anyone walking past that we’re an authority in our field.” – Todd Wolfenberg, CEO, Yoga International
- Providing useful background information: Even if they can’t directly impact decision making, some vanity metrics are useful to know regardless.
“I put our top ten best-selling products on our TV dashboard. Now my colleagues can tell me what they are because they see the list every day and they know where to focus their efforts.” - Linus Larsson, Global Online Traffic Manager, Thule
Creating context for PR, stakeholders and customers: Although superficial by themselves, metrics such as revenue, number of customers and headcount can be useful for giving people outside of the company context around the company.
Fostering transparency: Having a radically open culture is increasingly important to a number of companies, and making certain vanity metrics freely available on a dashboard can support a drive to be more transparent.
“Early on, we came close to running out of money and I wanted to communicate some urgency to the rest of my team and be transparent with the situation we had on our hands. I put a dashboard up in the entrance to the office that people had to physically walk around to get to their desk, and on it was just one visualization showing the amount of cash we had in the bank. Seeing that every day when coming to work was a stark reminder to everyone that this is reality, not Silicon Valley!” - Jindou Lee, Founder and CEO, HappyCo
Summary: How to use vanity metrics sensibly
- Make sure you have a foundation of solid actionable metrics
- Recognize when you are handling a vanity metric
- Be very clear on what your purpose is for sharing it
- Never let a vanity metric direct actions
How have you successfully used vanity metrics? Let us know in the comments below!