How to find meaningful metrics — over vanity metrics — for your startup
How to think deeper about what metrics actually mean something for your business and tell the story of success.
Note: This story was originally posted to The Goodbets Press on 8/30/2019
The number of users, total revenue, funds raised, new hires made. These are all numbers, and numbers that are typically thought of as success indicators for a startup. But, are these numbers really meaningful and do they tell the whole story? Sure, your new app might have 10,000 users, but are they engaged with your product? Are they experiencing success, do they keep coming back? Don’t be fooled, this is a vanity metric — meaning it’s simply a number that doesn’t correlate to something actionable. They look great on paper, but that’s it. They aren’t going to move the needle towards success and aren’t going to help you achieve your business goals and find growth. This is important in a startup because you want to be chasing real and actionable growth with your limited resources, instead of vanity. When you focus on vanity over results you set yourself up for failure.
Identifying Vanity Metrics
We’ve established that vanity metrics are not where it’s at, but how do we know if a metric is of the vanity variety? Some very common vanity metrics include things like: page views, number of visitors, email sign-ups, funding raised. Here are some questions to ask yourself:
Can I tie this back to real performance?
I ran a mile this week. In fact, I’ve run many miles in my lifetime. But, how fast did I run that mile in? Without that key factor, you’re unable to gauge how I really performed. It could’ve taken me 20 minutes, it could’ve taken me 5 minutes (realistically, it was probably 9 minutes). In this case, miles ran is a vanity metric, but my running pace (i.e. how long it took me to run those miles) is the real indicator of how I’m performing. This is what makes that data meaningful and what gives a real frame of measurement.
Does this tell a story of what’s really happening?
Despite being thought of as totally objective, numbers and data can be manipulated to tell a different story. A startup might look like it’s growing because it’s hiring, but that might not be the whole picture. Perhaps these new hires have increased their burn rate to something unsustainable. Maybe they’re hiring because they have such high turnover. A number is simply one data point on the lengthy chart of a startup’s course. Examine if your metrics are really telling you the truth and cluing you into what’s going on.
Can you do something with this information?
You hit 7,000 page views this month! That’s great, but what are you going to do with that? Are those 7,000 sales? Nope. Can you trace those 7,000 views back to something that happened for your business? What will you do with those 7,000 views?
This is where the actionable part comes in. A metric will only be valuable to you if you’re able to do something with it to help sustain or grow your business. Without the ability to take action, a metric falls short of usefulness to your startup. Measuring something like the conversion to sales you’re getting from your website is real and actionable — it’s measuring how much a desirable business outcome happens.
From Vanity to Meaning
How do we move towards metrics that are meaningful? Before you can measure, you need to know what you’re measuring for. What does success look like? What is the desirable outcome? You’ll need an understanding of what the end goals are. With that in mind, you can piece together each of the components or requirements for that success to happen. Then, you can create metrics for those components.
Now you’re faced with something more actionable that can guide decisions and measure true impact. In general, if it measures impact, can help you make more informed decisions, and indicates your performance then it’s a meaningful thing to measure.