Release an app in the market and chances are that you’ll get asked the question – How many downloads has it had?

It seems like a reasonable question. The objective of such a question though is to determine whether your product is getting any traction in the market. Unfortunately, that number is a vanity metric, which as Eric Ries once said,

Are the numbers you want to publish on TechCrunch to make your competitors feel bad.

In other words, vanity metrics are measurements that are designed to be impressive, but not actionable to business health or business growth. And focusing too much energy on these numbers can certainly be a bad thing.

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The danger of vanity metrics

You measure things so that you can take action based on the outcome of those measurements. The danger with vanity metrics is that they make you feel like you are getting results without actually telling you anything useful about your business. In short, they steer you off course.

For example, let’s say you had a great spike in app downloads during the month of July. You then might assume that what you did in June helped with this. The logic says that if you do more of it, you could get an even bigger spike.

Here are the main problems with this metric.

  1. The spike doesn’t tell you what caused it. It could have been something you did, something an influencer did or a particular media mention.
  2. It also doesn’t matter how many people download your app for free because you only make money when people buy to upgrade.

So, since it doesn’t contribute to getting more paying customers, or happier and loyal customers, the metric is in fact a red herring.

On the other hand, if you were able to determine the number of paying active users, their level of engagement, and what your profits are, you will be in better position to take action.

Actionable metrics vs. vanity metrics

Unlike vanity metrics, actionable metrics tie back to the objectives of your business and to specific and repeatable tasks you can improve. These metrics will change as a business grows and matures over time.

To examine the difference between actionable metrics and vanity metrics, take a look at the table below. It shows how vanity metrics can be replaced with metrics that are useful and actionable.

Vanity metrics Actionable metrics
Number of social media likes Number of social media referrals
Number of email subscribers Email opt-in conversion rate
Number of leads in sales funnel Cohort analysis of sales funnel
Marketing spend Return on marketing spend
Number of customers acquired Customer acquisition cost
Month recurring revenue (MRR) Customer lifetime value

The actionable metrics are ones that could be used to discover something important about what is happening to your business.

Take for example a classic vanity metric like social media likes on a post. Even if you have a lot of likes on a post, it doesn’t do anything to determine if it makes any difference when it comes to revenue. However, engagement like comments, conversations, mentions that lead to greater brand awareness and referrals provides actionable information that speaks to customer and audience behavior.

Are vanity metrics completely useless?

Vanity metrics are often top of funnel metrics that cannot represent broader brand awareness. Measures indicative of engagement such as likes and shares aren’t of much use if you don’t know who is viewing your content or sharing it. It also does not provide any information on how that translates into revenue.

However, times are changing. Improvements in marketing analytics can demonstrate how downloads and website visits can translate into leads, conversions, and revenue. Through conversion tracking, businesses can now provide insights into the lead quality and the conversions of those leads into new business. As a result, metrics like downloads and views now become relevant.

Joe Pulizzi of the Content Marketing Institute has long argued for strategies that build an owned audience (followers or subscribers) who have indicated their interest in your business and content. This offers the chance to speak directly to them without paying for advertising in order to gain exposure and reach.

Take for example a business that sells complex products where a conversion can result in revenue of tens of thousands of dollars. There is nothing vain about acquiring a hundred followers on a social media platform for such a business. In fact, metrics like shares and likes can contribute to reach and awareness of the brand and its content in two ways.

  1. They are an indicator of engagement, which in turn drives organic search rankings.
  2. They contribute to reach directly.

What does this look like in practical terms?

Landis+Gyr, a global energy management solutions provider, noticed an increase in their organic social media following. This was initially driven by the number of employees they had.

They decided to leverage this via an employee advocacy program to show a more human side to their brand. The company set up a pilot program with 60 employees who were active on different social media platforms. The result of the program included:

  • 1,800 content shares
  • 1,500 engagements
  • An estimated earned media value of over $10,800

These numbers provide a tangible value to sharing. In understanding the multipliers involved, you can begin to link shares to an increase in reach. This, in turn, has a likely impact on awareness.

In summary, vanity metrics cease to be vain if you can prove why they matter.

How to find metrics that drive growth

Relying on business metrics is essential to drive growth, but some metrics could lead you down the wrong path. In other words, you could be led to think your business is doing great when in fact you should be revising your strategy.

So how do you ensure that you are using actionable metrics as opposed to vanity metrics? If the metric can help answer one or more of the following questions, chances are you are on the right track.

  • How do we gain or lose revenue?
  • How do we lose or gain customers?
  • Why are people visiting my website?

Struggling to decide which metrics to start with? First, look at revenue metrics like customer lifetime value, average order value, customer acquisition cost, recurring revenue (like ARR or MRR), and so on.

In other words, build a process for tracking the health of your business. Not just your site or social media channels. Here are two critical steps to follow when starting out:

  1. Pick 1-5 metrics that tell you how healthy your business is.
  2. Find analytics tools that get you as close as possible to these metrics. Chances are you may need to import and merge data into a spreadsheet.

Once that is done, you can look at other metrics that provide a comprehensive picture of your business and its customers.

Bottom line

To avoid getting bogged down by vanity metrics and get really good data instead, you need to talk to your customers. Find out why they bought from you and how they first heard about you. Ask them to show you how they use your product or service.

This means you need to talk to human beings. This can seem daunting, but business is really about building relationships so reach out to your customers.

Follow the process above and you’ll get better information and data in five minutes than you will from five months of only looking at data and reports.

With your actionable business metrics, you’ll know exactly which questions you should be asking. You’ll get a better understanding of things such as:

  • Why were they hesitant to sign up for the free trial?
  • Why did they abandon their shopping cart?
  • Why did they cancel their account after a few days?

In other words, it gives you a deeper understanding of your customers’ behaviors. When you truly understand your customer, you can delight them at every step of their journey. You can also build your business faster than you could have imagined.

What actionable metrics are essential to your business?