Actionable Vs. Vanity Metrics – Some metrics are critical to track and others aren’t. Metrics have to matter, and they have to be actionable. Stick around to find out why.
So what is a metric exactly?
A metric is a numerical measurement or evaluation of something related to things like, financial performance, a process or events of some kind. Key performance indicators or KPIs are a specific category of metrics. KPIs help track against performance, objectives and goals, and usually for a company, business function or individual worker.
Every KPI is a metric, but every metric is not necessarily a KPI. When it comes to products and product features, efficacy should always be measured using so-called success metrics, including those products and product features that are built with advanced technologies like, machine learning and AI.
I mentioned in the intro that some metrics are critical and that metrics have to matter and they have to be actionable. The key is actionability. Like the idea of gaining and using actionable insights, actual metrics help drive, or at least inform decision making and taking actions. This is what makes actionable metrics matter.
The opposite of actionable metrics are non-actionable metrics or what people often call vanity metrics. Vanity metrics make people in companies feel good, but unfortunately, they don’t inform decision makers. If a metric doesn’t change behavior or cause something to be done differently, then it’s a vanity metric and should probably be ignored. So what are some of the specific differences between actual metrics and vanity metrics?
Vanity metrics tend to be a snapshot count of something, like Twitter followers or something that really has nothing to do with your actual business or offerings. So things like social media followers, subscribers on a mailing list, unique website visitors, and these metrics tend to increase over time, both organically and artificially through activities like marketing.
Ultimately, these metrics are mostly meaningless because they don’t tell you why people buy or use your product or services. And more importantly perhaps, why they stop. I could have one million followers on my widget company’s Twitter account, but if none of those followers buy my widget, I’m out of business. Actual metrics on the other hand, tend to be comparative and are usually best expressed as a ratio or a rate.
So, a percentage of a total or an amount of something per something else. Like a frequency that measures an amount of something per unit of time, like so many conversions in a week. Actual metrics matter and should be prioritized. They help inform decision making. And they also change depending on the company stage of growth. So for example, instead of total conversions, measure total conversions per month. Or average conversions per customer per month.
Or instead of total revenue earned, measure average revenue earned per customer per month, and then track these actual metrics over time. Metrics like these, tell you whether your business or product is doing well or not, and provide insights to help you change things for the better. All right, we’ve covered a lot and hopefully you’ve learned something new. The key takeaway is that actual metrics are good, and vanity metrics, while sometimes interesting, are usually bad and shouldn’t be focused on.
Let us know in the comments of any other vanity metrics or actionable metrics that you’ve come across and think are worth sharing.
reference – Actionable Vs. Vanity Metrics
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