I’m reading Eric Ries’ The Lean Startup this week. In a word – brilliant. I honestly believe this book has had more impact on my business than any other book I’ve read in the last four years (and I’ve read a few). I can’t wait to share some of my top takeaways in a proper Actionable Summary in the next couple weeks, but I just couldn’t wait to get this one out: Vanity Metrics.
In the book, Ries talks about the difference between Vanity Metrics and Actionable Metrics. Vanity Metrics are those that show your progress. Nothing wrong with this, so long as you’re tracking the right metrics. It’s exceptionally easy to make a company look good through numbers and, if you’re not careful, you can get dazzled by your own brilliance as you watch your numbers climb. But are they the right numbers? Do they even matter?
Here’s an example – Our free newsletter at Actionable grows each month. New people subscribe and (thankfully) few people unsubscribe. If we graph it, the progress looks pretty healthy (up and to the right). Another graph that looks good is our monthly unique visitors; every month we grow in total number of visitors to the site. All good.
However – If we’re honest with ourselves, it’s the relationship between these two sets of numbers that really matters if we’re at all interested in growth. A bump in total visitors to the site is great, but if they come, puke and leave (to paraphrase Analytics guru, Avinash Kaushik), we’re not actually growing. What we should be tracking is total number of newsletter signups in relation to the total number of new visitors to the site. If this number is flat or (God-forbid) declining, we’re actually not improving the business. Instead, we’re relying on past feature updates to justify current successes. Everyone still with me?
Vanity Metrics: Total monthly website visitors. Total newsletter signups.
Actionable Metrics: How many of the new visitors sign up for our newsletter each month.
I can bask in the “up and the the right” numbers of the vanity metrics all I want – it doesn’t mean we’re improving the business.
What are you tracking in your own business? Something that actually matters, or something that makes you feel good? Make it Actionable (oh how I love that word) and you’ll start focusing on the right aspects of your business.
Stay tuned for the full Actionable Summary!
