How to know if your kpi is a vanity metric?

Vanity metrics may look impressive but they do not offer actionable business insights. Learn how to differentiate between KPIs and vanity metrics here.
Last updated
May 2, 2024

There's a lot of hype around which KPI is the most important measure. Some might believe that "Page Views" or "Time on Site" are critical, but the reality is that a business' KPIs will depend on their business model and how they want to improve it. The purpose of this article is to discuss which KPI is most likely to be a vanity metric in your business.

Every business will have a few key performance indicators (KPIs) that define their success. But there’s a strong chance that one of these KPIs is an accidental vanity metric, which means it’s not really a good barometer for measuring performance. For this reason, it’s important to understand the differences between a vanity metric and a real KPI, and how to identify them in your company.

Which kpi is most likely to be a vanity metric?

Vanity metrics are metrics that look good but don’t actually give you information on how to make your business better. They’re easy to measure, which is why they get tracked so often. It's also easy to understand them, since they're usually pretty straightforward. Finally, it's simple for a team or company to communicate the information in these metrics—after all, they often just show what's happening right now!

However, vanity metrics can sometimes be detrimental if teams become obsessed with achieving high scores in these areas and forgetting about other important parts of running a successful business (like customer satisfaction). So next time someone asks you what your KPIs are, take a minute before answering: are they truly helpful measures of success? If not—and if there are more meaningful ways of measuring performance—you may want consider changing how you track data altogether!

Put another way, vanity metrics are those metrics that make us feel good but do not really provide actionable insights. Peter Drucker , the father of modern management, put it best when he said: "What gets measured gets managed." For teams working on hitting their OKRs , vanity metrics are usually a distraction. And, as we've talked about before , most data is not really that useful.

Find the KPI's that directly drive your outcome

Things like pageviews and unique visitors are OK, but metrics like engagement time are a bit more revealing. Engagement time is a great indicator of how engaged your audience is, but it's not the only metric you should be tracking.

In fact, there are plenty of other KPIs you should look into as well:

  • Clickthrough rate (CTR) tracks how often people click on links within your site or email campaigns. It's a good way to see what content they're interested in and what messaging resonates with them — but don't mistake CTR for engagement, because visitors may be clicking over to another page without reading or engaging with any part of the website or campaign!
  • Customer retention rates measure how many people return after a purchase or sign up for your email list. This can give you an idea of whether customers enjoy their experience at your business so that you can focus on improving it if necessary.

Delayed customer feedback Until we see something in the real world, we almost always don’t really know how it works. The same is true of your marketing strategy: until you hear how customers reacted to something, it’s hard to know whether or not it was a success.That's why it's so dangerous to rely on vanity metrics that only track the results after they’ve already happened.

Being able to identify immediate results is the sign of a vanity metric

In the world of business, there are metrics that are important to a company's long-term success and there are those that are just for show. Think about it: if your organization is only focused on short-term results, you probably won't be able to do much when it comes time for an expansion or new product release. You'll have no way of knowing whether or not your marketing tactics are working because you don't have enough data to analyze them in depth.

To make sure that this doesn't happen, companies need metrics they can use in their analysis processes as well as ones they can use when it comes time to make decisions about how they want their business run in the future. So what exactly makes up a good metric? Let's take a look at some examples:

Immediate Results - This type of metric will give you some idea right away if something was successful or not based on its impact on certain aspects of your business such as sales volume or customer satisfaction level (CSL). An example would be "X number of customers purchased product #Y from store Z during week 2" which shows us whether we should continue selling this item through store Z since customers seem interested in buying it there too often already! However...

Reduce influence on outside factors

Satisfaction metrics can also be an example of a vanity metric if they're heavily influenced by outside factors that you don't account for in your analysis. If you don't consider how other KPIs, internal or external factors, time of year and more may influence your data, you could be looking at a vanity metric.

Comparing your satisfaction metric over time is one way to measure whether its value has increased or decreased. But if people are generally satisfied with their experiences but their scores actually decrease over time (even when everything else about the experience remains constant), then it's likely that there was something else going on in the background.

For example: Say that your customer service team receives an average score of 7/10 on their phone calls with customers each week. This means they're doing a pretty good job at handling customers' needs and answering questions—and they're able to repeat these results consistently! However, your company implements new training programs for all of its employees every quarter to ensure they're up-to-date on best practices and well versed on how each department works together as an organization... which means that everyone starts performing better than usual after these sessions end (including those working in customer service).

Don't judge your business by metrics that don't help you grow it

Your goal should be to use data to make decisions that support the growth of your company, and this can only be done if the data you're using provides actionable information. If a metric isn't directly related to helping you do that, it's not really worth paying attention to.

Make sure your KPI is actually a KPI (key performance indicator). There are lots of different types of KPIs out there - some more useful than others! The most common ones are: lead generation numbers; conversion rates from leads into customers; sales volume; product usage statistics and costs associated with them; customer satisfaction ratings/surveys; employee productivity/retention rates/expense reports etc., but if something doesn't directly affect how well your team performs at its job (or how much money they make), then don’t worry about tracking it! In fact, tracking irrelevant things just wastes time & resources unnecessarily which could be better spent elsewhere (like growing the company).

Whether you are an established business or just starting out, every founder should have a clear understanding of key performance indicators (KPIs). This concept is critical to your company measuring and monitoring progress and reaching your business goals. While you may be able to grow your business without a clear understanding of KPIs, you will be missing out on a lot of opportunities to attract investors, acquire new customers, and increase sales.

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