Vanity Metrics vs Actionable Metrics: A Guide to Tracking the Right Stats
TLDR
- Vanity metrics might not be as important as you think. They can be misleading and can even cause more harm than good. Businesses need to decide what they care about the most and base marketing campaigns on those metrics instead of on vanity metrics.
- Actionable metrics offer a much more objective approach to measuring marketing efforts. They help us determine what we’re doing right and what we’re doing wrong.
- Vanity metrics can mislead. They can be misleading because they aren’t as objective as an actionable metric.
- Vanity metrics encourage businesses to ignore their most important customers. It’s important for businesses to focus on their key audience. A vanity metric might convince them that they don’t need to focus on their core audience, which can actually cause more harm than good.
To help marketers understand vanity metrics and how they can be used effectively, we will examine vanity metrics versus actionable metrics in this article. Additionally, we will discuss some common pitfalls related to the use of these two types of analytics.
The term vanity metrics describe metrics such as page views, social media followers, and other indicators of popularity. On the other hand, actionable metrics focus on conversions and how much revenue can be attributed to a business.
What Are Vanity Metrics?
A vanity metric is one that does not really matter, in terms of business values. While they may seem like they tell us something valuable, they often give us the information we could have obtained from another source. The keyword here is “valuable”.
The value of vanity metrics is often questioned because they do not provide actionable information.
However, one reason why marketers like them are because they are easy to understand. This means that it is easier to present them to the upper management or investors. They also tend to look good when compared with more complex numbers.
For example, if you want to show your boss that you spent $1 million marketing last year, then showing him/her that you had 1 billion impressions would make for an impressive presentation. However, he/she might feel less impressed by seeing that number than by knowing that you generated $10 per impression.
In addition, many people think that vanity metrics are cheap ways to measure success.
What is an example of a vanity metric?
Vanity metric makes you feel good but don’t help with decisions. A common example of a vanity metric would be ‘likes’. Likes have been around since Facebook was created and continue to grow as more brands use them to measure their engagement.
But, likes alone tell us very little about whether someone has engaged with our brand or if we’ve made a positive impression. For instance, do we really care if someone likes our page or posts? Or, do we just like having lots of likes?
Another example of vanity information such as:
- Number of downloads from an App store
- Number of Facebook Likes or Twitter Followers
- Number of Web visitors
- Number of Time on Site
- Number of blog posts read
- Number of newsletter subscribers
- Number of tweets per follower
- Email subscribers
The issues with a number of these metrics are that not only does it tell us how many people have engaged with our brand/community/product, but also that it tells us how successful we are as a brand.
… this makes it a vanity metric because it gives us a number without indicating whether the statistics are actually useful.
What are actionable metrics?
Actionable metrics measure value. These metrics indicate what actions need to be taken to improve performance.
An example of an actionable metric would be the conversion rate. It indicates how effective a campaign is at converting traffic into sales. In order to determine which campaigns work best, we must first know what works well. We cannot simply assume that all campaigns perform equally well. Therefore, we should test each campaign before deciding whether it’s worth continuing with it.
Another example, a Facebook fan. They don’t give a business a great deal of information with regards to how likely they are to become a customer or promote their product or brand.
We all want to know how much revenue we can generate from our marketing efforts. Using actionable key metrics, we can get this answer.
What is a good example of an actionable metric?
- Number of sales generated by a specific advertisement
- Conversion and retention rates
- New user acquisition rate
- Product usage/adoption
- Average order size and cost per sale
- Revenue generated by each conversion
- Return on investment
- Net profit margin
- Product usage/adoption
- Feature usage
- Customer Lifetime Value
- Sales and lead generation
- Social media shares and engagement
These metrics provide valuable insights into what works best in terms of advertising campaigns. If we had used vanity metrics, we wouldn’t have known any of this!
Vanity and actionable metrics are not the same.
You may be wondering, what’s the difference between a vanity metric and an actionable metric? The main difference is that actionable metrics help us make decisions.
It’s also worth noting that some companies may choose to ignore certain types of vanity metrics altogether. Some marketers believe that if someone has followed them on Twitter, they’ve given permission to follow back. Others think that if someone follows them on Facebook, they must be interested in hearing updates.
This isn’t always true. In fact, we’d argue that ignoring vanity metrics could hurt your brand reputation. We’ll talk more about this later.
But wait, do not neglect vanity metrics
With so many ways to measure your business, it can be hard to know where to start. Vanity metrics aren’t a bad place to start with regards to digital marketing because they can help you stay connected with your audience — that is, when used properly.
However, spending too much time on vanity metrics can lead you down a dangerous path. For example, if you’re more concerned with the number of Facebook likes than finding out what your fans like about your brand, you’ll never know if you’re making any progress.
How do you measure your success?
Both types of metrics matter for several reasons. Both metrics are employed by most successful companies and have proven to be very effective. The key to understanding both types of metrics is to use them in tandem.
On their own, vanity metrics are often misleading. It’s best to develop a complete picture of your audience. Use web analytics, analytics tools, and social media tools to get a better understanding of your audience before starting your advertising campaign.
The main pitfalls are that these metrics often offer a false sense of security. For example, just because you have 2000 Facebook fans doesn’t mean you’re well-liked. If you’re obsessed with bringing in new customers at any cost, you may lose sight of your core audience.
Another problem is that vanity metrics can lead to incorrect assumptions about your audience or marketing goals. If the only thing you care about is how many people follow you on Twitter, for example, you might think your followers are interested in your product offerings when they might not be.
An actionable metric is one that ties specific and repeatable actions to observed results. Eric Ries recommends focussing on the macro effect of an experiment but it’s just as important to focus on the right macro. Of course, you should measure everything. Even if you think that your vanity metric is obvious, you should still measure it. Nothing is more important than getting the right metrics wrong. However, you should focus on the right ones.
