Forget Vanity Metrics. Use Actionable Data to Grow Your Business
‘Vanity metrics’ refers to any data that you measure within your business that has no real effect on your bottom line, despite making you feel positive. In other words, data that doesn’t matter. Although some positive metrics help make you feel optimistic about your businesses overall health, they don’t tell you what you need to know.
Vanity Metrics Reveal Very Little About Your Business
In business, it is essential to use measurements or metrics to aid wise decisions that further encourage growth. Vanity metrics can achieve the opposite, steering you away from the things that are most important to you achieving your goal.
Business owners often look at things such as spikes in web traffic. Then investigate the cause of it, and ‘do more of it’ to gain more business. Although high levels of visits to your site are positive, it is not something that generates money alone. Which also goes for other vanity metrics such as ‘likes’ and follows on social media. In short, if you’re doing something which doesn’t result in getting more customers or improving relations with existing ones, it is a complete waste of time.
Actionable Metrics are Highly Important Because they Relate to Your Bottom Line
The good news is that if you’re using lots of vanity metrics to keep track of your businesses success, its easy to translate them into actionable metrics.
So, if you currently measure marketing spend, measure your return on marketing investment instead. If you’re monitoring the number of page views on your website, looking at your conversion rate is more insightful. Or if you’re convinced your latest post is brilliant because it’s attracting lots of likes, instead look at the number of post engagements, and the amount of new business that occurs.
Types of Actionable Metrics You Should Be Measuring
The things that matter are metrics closest to revenue and costs. After all, nothing is more revealing about your businesses health than it’s profit and loss statements.
Here Are the Key Metrics You Need to Keep an Eye on:
Revenue Metrics. In this category, the parameters you need to measure within your business are total revenue, net profit, customer lifetime value, recurring revenue and customer acquisition cost.
Acquisition Metrics. These types of metrics show where your users originate. Although there are many different types, the metric that shows user flow through your site can be very revealing. You can find out pages that generate the most leads, plus pages that perform poorly.
Conversion Rates. You need to measure pages on your site that lead to sales as they can reveal the ones which don’t perform well. A/B testing can be used for this purpose to help you work out the right audience to target.
Actionable Metrics will Push Your Business in the Right Direction
Although vanity metrics may make you feel that your business is moving in the right direction, they do very little for your bottom line. Only consider tracking metrics that tell you what you need to know about your business and marketing strategy.
You will make better decisions which can ultimately result in boosted revenue and better return on investment.