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What are examples of vanity metrics and why they are bad?
Hello! Thank you for your question regarding vanity metrics. The short answer is that vanity metrics don't provide business owners with any concrete or actionable information regarding their company's success. As a result, using them does not provide you with any information on how to move forward in growing your business. You will see a deep dive of my findings below.
OVERVIEW
Before providing examples of vanity metrics and why you shouldn't use them with your business, I'd like to briefly review what vanity metrics are. I say "briefly" because, from the content of your request, it seems clear that you already understand what vanity metrics are. However, it will be beneficial to provide a brief overview before moving forward with the remainder of my research response.
According to an article published by TechCrunch, which you referenced in your request, vanity metrics are the types of data and statistics which can be easily manipulated to prove a point or make a company seem more successful. For example, the number of users registered to a website, number of downloads of a specific application, and raw pageviews are all vanity metrics. As an article from Kissmetrics explains it, "vanity metrics are all those data points that make us feel good if they go up but don't help us make decisions." As an example, the programmer of a new iPhone app might be happy to see that the number of downloads has doubled on their app in the last 24 hours. However, that metric alone doesn't provide them with any details or statistics to help them make a decision.
EXAMPLES
As I explained above, vanity metrics are those statistics and data points which look good and make us look successful as they climb, such as subscriber numbers, visitor numbers, pageviews, and downloads. Oftentimes, these are the numbers a business or blog will present to potential advertisers as proof of their potential growth; in terms of making decisions for how to move your business forward though, they don't provide much insight.
In addition to subscriber numbers, visitor numbers, pageviews, and downloads, vanity metrics can include the number of "likes" or "follows" on your social media accounts, and the number of times a Facebook post or Tweet has been shared/retweeted.
Despite extensive research, I was not able to locate concrete examples from a specific company that was misled by the use of vanity metrics. Instead, articles and data which has been published on vanity metrics focuses specifically on how companies can be hurt by the use of vanity metrics, without providing specific examples of well-known companies that have done so. One reason for this could be that dependance on vanity metrics does not necessarily result in any measurable deficiency. Instead, the user will simply be unable to move forward or make helpful changes to his or her business. For this reason, there aren't any examples of businesses being actively harmed by the use of vanity metrics.
WHY VANITY METRICS CAN HURT YOUR BUSINESS
As I briefly covered in the Overview section of this report, vanity metrics can be hurtful to your business plan in that they don't help you make a decision. While seeing your pageviews climb may make you feel good about your content, that metric alone won't tell you anything about your company, your customers, or what you should do next to help grow your business.
Beyond this though, vanity metrics can also be hurtful to your business in other ways. For example, seeing your pageviews climb unexpectedly could seem like a great thing and, in some situations, it may be. However, a boost in the number of viewers on your blog could also simply be the result of a recent guest post you wrote on a popular website. Worse than that, it could be the same five people vision your website 200 times each. Pageviews, as an example, do not provide any specific information for you to use in your business.
Alternatively, imagine a situation where your pageviews or downloads plummet. Simply viewing these metrics may make you feel awful about your business outlook, but they don't provide you with any explanation or way of moving forward. This can result in you eliminating something that may have been incredibly important to your business' growth, or leaving something else intact that you should really consider getting rid of. Without an explanation for why your numbers are dropping, it's difficult to decide how to fix the problem.
Ultimately, the specific metrics you should be paying attention to will be largely dependent upon your company's goals and what stage of business you're at. For example, a brand new business might be primarily concerned with growing the amount of traffic to their page and followers on their social media. This focus allows them to get their name out there before making any further decisions. However, a more mature company that's been around for a few years and has already built a name should be more focused on profit numbers, amount spent per customer, time spent on the company website, etcetera. As a result, each of these business owners will need to be focused on different metrics.
As mentioned above, the specific type of metrics you'll want to focus on with your business can vary. However, examples of some actionable metrics - meaning those pieces of data that provide you with information to make a decision off of - are: current active members, number of new and lost members in the past 30 days, retention rate, what link new members are using to sign up, and revenue.
SUMMARY
To summarize, vanity metrics may look good on paper, but oftentimes don't provide your business with any actionable information. In and of themselves, these metrics are not harmful. However, reliance on them without any additional, actionable data does not provide you with any idea of how to move forward in growing your business.
Thank you for asking Wonder! Let us know if we can help with anything else.