Don’t let vanity lead your decision-making

A business metric is any quantifiable measure that a business uses to monitor, track, and assess the failure or success of any business process. Metrics help organizations determine what they need to focus on, give direction, and enable tracking. However, to achieve this, the organization must focus on metrics that point to issues that matter.

What are vanity metrics?

Vanity metrics are statistics that look great at face value but do not translate to any meaningful result. The data looks superficially impressive in most cases but is not connected to any of the organization’s key performance indicators. An example is a company that may have many social media followers or views on a website. However, those followers or views do not reflect user engagement, active users, or the cost of acquiring new customers.

If the company spends time on vanity metrics, it will likely think it is doing better than they are while ignoring its core KPIs. It is also likely to waste resources on things that need to improve its objectives.

To identify vanity metrics, the company should consider the following:

• Are there decisions it can make with the metric? If not, is the metric vanity?
• Can you intentionally reproduce the result, or is it a random occurrence?
• Does this data reflect the truth about the organization? For example, is the increase in page views increasing engagement or conversions?

What metrics SHOULD you focus on and why?

The metrics you pick should have a bearing on the main objectives of the business. Just as the objectives vary from one organization to another, so do the metrics you can focus on. Some of the metrics that the business should focus on include conversion metrics.

Conversion metrics determine how well the business converts potential customers into paying clients. Here are some of the conversion metrics that it should keep in mind.

The company should also determine the performance of its paid media campaigns. This enables the organization to determine the impact of its marketing efforts on the target market. Some of the metrics you should include the following:

How can you identify those metrics in your business?

To identify the metrics that you need to focus on, start by checking the various departments you have in the organization and what contributes to their success. For example, sales, business development metrics, revenue, new customers, and more leads help increase volumes, while in operations, a faster process and lower production costs help improve margins.

 Then, ensure that they are SMART: specific, measurable, achievable, relevant, and time-based. Finally, pick metrics that can be manipulated to show trends—for example, sales volumes.

What should a business focus on instead of its metrics?

Instead of metrics, the company can focus on key performance indicators. These are also quantifiable measurements that gauge the performance of the organization. KPIs, unlike metrics, are directly related to business objectives because they measure success against a predefined target, industry peers, or objectives.

KPIs, such as net profit, revenues, and liquidity, can be financial. They can also be customer-focused, such as retention, loyalty, and satisfaction. Others may be process-focused, such as operational performance.

Conclusion

Are the metrics your organization is focusing on helping to improve strategy?

Contact us today to see how we can help you make sense of your metrics so you can act on them!