It wasn’t until recently I realised the extent of the vanity metrics problem. Sucked in by their shininess, I had blindly played a role in their endorsement.
I’ve read (and produced) many reports that were praised for being interesting. Interesting but not actionable. And I fear this is the norm we’ve created. It’s acceptable to produce a huge amount of numbers on a regular basis. So much so that we now need to automate the process.
“The key to actionable metrics is having as few as possible.” – Eric Ries.
If you have a piece of data on which you can’t act, it’s a vanity metric. A good example - the number of visits a website gets a day. Doubling this number probably isn’t going to change the way you’re running your business. The metric doesn’t shed any light on who’s visiting, what they’re looking at, if they’re subscribing, if they’re buying or why they’re leaving.
The metrics that should matter to you will enable you to change your behaviour by helping you to pick a course of action.
It took working for a startup to break the hold vanity metrics had on me. Corporates may have the resource to track numbers for fun, but startups need to defend their every dollar. Their chosen metrics are reflections of the business levers they’re trying to optimise.
Here are a few ways to open you eyes to vanity metrics:
Have an influence. Metrics measure effects. They will help you to monitor the things that you’re capable of influencing. A business needs to not only understand what their metrics represent, but the behaviours that influence them. A metric of importance, that you can’t influence, needs more analysis to be understood.
Be open to change. If the metrics you track aren’t changing, then neither is your business. A business’ metrics should be a reflection of their focus. Metrics require monitoring, discussing and, at times, changing. As a business grows, signups and brand awareness (priority one in the early stages) may be replaced with some sort of revenue goal; with a focus on different metrics.
Know where you’re going. Metrics enable you to track progress towards a specific goal – big or small. If you can’t picture the end game, a metric’s value is worthless. Setting a target (and experimenting with the levers that influence it) will help you define what success looks like.
Less is more. ‘Data Visualisation’ has been an industry buzz term for a while, with many new software vendors in the market. Their tools provide businesses with the opportunity to track everything, when that’s the last thing they should be doing. With reporting automation becoming mainstream, understanding why you’re tracking specific metrics is a key to being a data-driven business.
Metrics reflect operation. They need to be understood and agreed on by more than those who track them. The process around using insight is just as important as the process that produces it.