Metrics that Matter: Vanity Metrics vs Actionable Metrics

Metrics_that_matter_Vanity_Metrics

Metrics That Matter

Ever open up an overpacked fridge and still struggle to find something healthy to eat?  A few weeks ago I went through something similar. But it wasn't a fridge that I opened. It was a client's analytics dashboard.  He was proud to call himself data-driven. And why shouldn't he? Afterall, he was tracking almost every metric that he could think of. But in that entire haystack of metrics — I couldn't find the metrics that matter.  

The information overload was so severe, that he couldn't even point to the most basic metrics without spending a few minutes searching. A lot of the metrics that he was tracking served no real purpose other than to show off big numbers. Every business should focus on moving the needle.  If you want to move the needle consistently, you need to avoid looking for it in a haystack. 

"If you want to move the needle, you need to avoid looking for it in the haystack"

So it's crucial that our analytics dashboard only track the metrics that matter. But which are metrics matter and which don't? In this post I'll go over the concepts of  vanity metrics—metrics that' don't matter, and actionable metrics—metrics that matter to move the needle.

Vanity Metrics

They say vanity is the devil's favorite sin. An entrepreneurs favorite sin is "Vanity Metrics". Oh, how we love using vanity metrics...

Vanity Metrics illustrate numbers that have no real purpose other than portraying a false sense of accomplishment. As a result, these metrics are used to either fool yourself or to appease stakeholders. These are the metrics that don't matter in the grand scheme of your business.

Metrics That Matter - Vanity Metrics Don't Matter

Vanity Metrics often hide behind seeming ‘actionable metrics’. For example, Total Number of Sales/Conversions may seem like an actionable metric, but in truth is a vanity metric. ‘Why?’ Because given enough time, this metric will inevitably increase. It does not give you any information about whether you’ve steered left instead of right.

Instead, let’s try something more specific. How about ‘Total Number of Conversions per month’? This is better - but it’s still not enough. Total Number Of Conversions per month will go up or down depending on the number of visitors you’ve had on a particular month. So the metric is dependent on

For example let’s say you had 100 customers visits in January with 10 conversions. In February you make a change to your landing page to improve your conversions. At the end of Feb you have 200 customer visits with 13 conversions. If you only look at Total Number Of Conversions, you will see this:

Month

Total Number of Conversions

January

10

February

13

Seems like your change worked out, right? Not really. Your conversions didn’t increase this month because of your change, it increased because you had more visitors. In fact, your change may have negatively impacted your total conversions. Instead, you need to focus on metrics that matter. 

Actionable Metrics

Actionable Metrics provide numbers that will help steer your direction. I like to call these "Needle Metrics". These are metrics that matter and help you make decisions that you can “act” on immediately. Companies like to claim that they are data-driven. But being ‘data-driven’ heavily relies on using actionable metrics. If you cannot ‘act’ on your data to drive your company forward, then you’re not data-driven.

Metrics That Matter - Actionable Metrics Matter

 Actionable Metrics should have at least one base number. This base number should dictate whether you steer left or right based on whether the number is less than or greater than the base number. To illustrate, let’s use the ‘Number Of Conversions’ example from the ‘Vanity Metrics’ section.

You just made a change to your landing page and you’re monitoring ‘Number Of Conversions’ to ensure that your change is positive. As mentioned, ‘Number of Conversions’ is a vanity metric that can be misleading. Even though the metric increases, it doesn’t reflect what truly happened. Instead let’s try using ‘Conversion Rate’ or ‘Percent of Users Converting”

Month

Conversion Percent

Total Number of Conversions

January

10%

10

February

6.5%

13

Now we get a better idea of what’s going on. Our conversion rate has dropped significantly. Clearly the change to landing page didn’t work out so well. We can ‘act on’ this immediately. But how we act comes down to human judgement. Data can only take you so far.

Should you try a different approach with you landing page? Or should you revert back to the previous landing page. Whatever you decide to do, ensure you make a baseline statement and then proceed with the following format: “I hypothesize that [A] is going to happen. If [A] happens, then I’ll do [X]. If not, then I’ll do [B]. This will force you to be actionable and keep moving forward with your experiments.

Metrics That Matter - Final Thoughts

In conclusion, keep your eye on the needle. Consequently you will avoid stuffing your dashboard with a haystack . Your dashboard should instantly draw your eye  to the metrics that matter.  And actionable metrics are the metrics that matter. They  have the inherent nature of enforcing action.  Vanity metrics, on the other hand, are noise and do very little other than help  enforce your reality distortion field.

Further Readings:

About the author

Shawn Dexter

Shawn Dexter is a Product Manager, Entrepreneur & Software Developer. He is passionate about innovation management & technology.

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