By Sameer Shah
If you’ve been thinking about marketing ROI, you’ve probably heard the term before: vanity metric. But what does it really mean? Should vanity metrics be wholly dismissed or do they provide some value?
Vanity Metrics: The Basics
A vanity metric generally refers to some quantitative measure or indicator that doesn’t provide significant intelligence or closely correlate to the real end goal. These metrics also tend to be raw rather than comparative.
A good example of a vanity metric is the number of likes on a social media post or the total number of customers a company has. At first, these numbers seem impressive and almost always as if more is better. But upon inspection, it’s a bit more complicated.
Let’s take the likes first. All things being equal, I’d rather have more people like a post than fewer. The post had to be seen before it could be liked, and likes are almost always a subset of views, so more likes means even more views. That said, the number of likes alone tells you nothing about the quality of those likes. Are the people who liked those posts the people who will become leads, purchasing customers, or brand advocates? Or are the likes coming from supporting friends?
The number of customers is another great example. We often get asked how many clients Khaana has. I understand the rationale…more clients would indicate a more successful business, right?
Maybe, maybe not. One client that paid $1 million in annual fees would be better than having 50 clients paying $1,000 for minor services throughout the year. To take it even further, a greater number of clients means likely higher administrative costs, collections risk, so on and so forth. On the other hand, for a Software as a Service (SaaS) business, the number of customers is an important and telling measure of adoption and inherent value.
The point here is that a vanity metric can mean something, it just doesn’t always mean something—and it almost never tells you anything all by itself.
Common Vanity Metrics
- Likes, comments, and shares
- Followers
- Customers
- Site or page views
- Clicks
- Bounce rate
- Session duration
Valuable Metrics
What is the opposite of a vanity metric, and what makes it inherently better? Powerful metrics are often referred to as valuable or actionable metrics. They provide information that either tells an irrefutable truth or can be used to make decisions.
An example of a valuable metric is customer acquisition cost. This is the amount that it costs a company to gain a new customer. For example, let’s say a product sales company runs social media ads for six months. It spent $10,000 during that time and netted 100 new customers. In this case, it cost an average of $100 to gain a new customer.
Now let’s say the same company knows from past experience that a new customer generates $1,500 in sales and $500 in profit over their lifetime. This tells us that the business is viable, and the company should probably increase their advertising spend.
On the other hand, if the lifetime spend was only $200 and profit was only $50, then $100 in customer acquisition cost is a losing proposition. In this example, customer acquisition cost is critical.
The key is that a valuable metric measures performance against a particular business objective. Likes, shares, and followers may play some role in driving business objectives, but their correlation is lower, harder to define, and more remote. The most important question to ask yourself when evaluating the right metrics to use is, “Is this measurement telling me something I can act on?” The answer is a good indicator of the metric’s value.
Common Valuable Metrics:
- Customer acquisition cost
- Cost per generated lead (even this is tricky because it doesn’t measure lead quality)
- Sales conversion rate
- Sales or profit directly attributed to a marketing campaign or event
- Sales driven by a Facebook ad
- Sales generated at a conference
When Vanity Metrics Play a Role
Everything we’ve discussed up to now seems to ignore a fundamental marketing and business truth: Achieving business success requires a series of activities, some of which aren’t directly tied to a business objective, but add up over time and move the needle in the right direction.
For example, consider the following steps:
Build social media presence > Increase brand awareness > Create engaged community > Drive online sales
A pretty common scenario, right? In the first few steps, vanity metrics including likes, shares, and followers are pretty important. They tell you how the community is growing and how engaged it is. The people running the campaign should be tracking those metrics and measuring them against expectations or competitor performance. In this example, vanity metrics play a role inside the guts of a campaign.
Vanity Metrics Are Most Important When Comparing Content
There is one case in which vanity metrics are critical: testing multiple pieces of creative content. Let’s say you’re considering running an ad campaign, but want to test a few different images first. One image and its related post generates 100 likes and five shares, while another one only gets five likes and zero shares. Clearly, the first image is the one to go with.
The Bottom Line
As in most of life, there is no hard and fast rule, or black and white answer. Some metrics tend to be more valuable than others, and certainly some tell a story all by themselves, while others may provide a small piece of information that could be an important part of the larger picture. The key is understanding exactly what your business is trying to accomplish, and creating a set of measurements to track performance at every step of the way.
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