“The only metrics that entrepreneurs should invest energy in collecting are those that help them make decisions. Unfortunately, the majority of data available in off-the-shelf analytics packages are what I call Vanity Metrics. They might make you feel good, but they don’t offer clear guidance for what to do.”

Eric Ries, author of The Lean Start-Up

Just like the mirror in Sleeping Beauty, vanity metrics can reflect anything we want to see. And because they are under the guise of “metrics”, they can be even more deceiving.

Here are some great examples of vanity metrics:

  • Registered users
  • App downloads
  • Pageviews
  • Lots of social media metrics such as Facebook fans, Twitter followers, LinkedIn connections

How do you distinguish vanity metrics? Here are some characteristics:

  • They are absolute numbers or percentages. In other words, the numbers have no context or baseline benchmark. You therefore have little sense of whether the number is good, bad, slow growing or a big jump.
  • They are not tied to a meaningful growth goal.  So what if you have 5 million Facebook fans!  If you are trying to build a network and show consumer interest – great!  If you are trying to sell a specialized multi-year IT project, it doesn’t matter.
  • You have no idea of causality.  Why did this number move? Human nature states that in the absence of proof otherwise, we assume the improvement comes from our latest initiative.  This can cause us to have an overinflated view of success, or to prematurely abandon a good initiative.
  • They are not tied to real customers or market segments. Marketing metrics reflect customer behavior. If your numbers are not tied to a real customer, you cannot gain insight into why, or why not, your offering is accepted.
  • There are many numbers, but few insights. Too many numbers can create more confusion and less focus.

Vanity metrics are not “bad”, or even false. Their danger lies in their ability to distort reality and not allow us to see where we need to redirect. What we need are actionable metrics. (Stay tuned for next week’s post.)

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