One of the reasons marketing and growth has evolved so much in the last years is that we can collect, process and interpret data more efficiently than ever before. As a result, data has become a central part of any growth strategy.
At Recruitee, we ensure that practically every assumption we make is based on some form of quantitative or qualitative data.
So what happens when a data-centric culture develops in a field that is riddled with egos and insincere marketing messages? That’s right, vanity metrics.
“Vanity metrics are the numbers you want to publish on TechCrunch to make your competitors feel bad.” — Eric Ries
The Eric Ries quote above pretty much summarizes it. Vanity metrics are the sort of metrics that look and sound good, but either mean very little or are misleading when taken out of context.
The Problem With Vanity Metrics
Exaggerating your metrics for the sake of branding or competition is not too problematic in itself, apart from the fact that it risks creating a ‘race to the top of bullshit mountain’, which can negatively affect the trust in or valuation of your market.
Every company tends to big themselves up and everyone has the right to stroke their ego now and then. The real problem is that a lot of people seem to be themselves convinced of their own vanity metrics. I’ve worked with dozens of companies where vanity metrics even form the basis for most KPIs and OKRs.
This sort if misleading data can quickly give you a false sense of security and distract you from the risks and challenges you should be dealing with.
So what are the most common vanity metrics in growth? Here are some that I’ve increasingly come across…
Vanity Metrics to Avoid
We have X Visitors/Users/Downloads
Let’s start with the most common one, which is some version of “we’ve got X amount of users/downloads/visits on our platform”. This metric sounds impressive and might even have some value. It’s often completely meaningless though.
If you want to scale a business, you need active users who don’t churn and even refer others. The number of users/downloads/visitors alone indicates nothing as they could be low-revenue, high-churn or even spam.
I once worked with a social media app that claimed 500,000 downloads, only to find out later that less than 500 were actively using the app. Having 500,000 downloads sounds awesome! But having an active user rate of only 0.1%? Less so.
The company ended up finding out that they didn’t have product-market fit and had to eventually close shop.
We’ve grown X % in Y years
This is one of the most common vanity metrics in growth today and one that really does my head in. There are even companies out there claiming 50,000% growth in a few years.
The problem is that this metric has no meaning without context. The value in something growing X% depends entirely on your starting point. Practically every tech company out there can boast over 10,000% growth if they choose the first month of their existence as their starting point. Growing 10,000% could mean increasing your revenue from $10,000 to $1 million ARR, but it could also mean growing from $1 to $101 ARR. Context is everything.
People do the same for things like cost per click, click through rates and conversion rates. Traffic that doesn’t convert is as worthless as conversions that do not retain or drive revenue. If I shift all of our ad budget to certain geo-campaigns, we would see increases in clicks of up to 500%, but despite that, there would be a severe drop in paid conversions.
We run X experiments per sprint
This is one of the latest vanity metrics that I keep hearing from growth people. There are so many people bragging about how many experiments they run per sprint or per month.
Running more experiments is not necessarily better.
There is no value in experimenting just for the sake of experimentation. Running 20 experiments per months could be a sign of an active team of growth executors, but it could also be a sign of poor ideation or prioritization. Ideally, your goal should be to run as few experiments as possible with the biggest impact and results.
Of course, in practice, your experiments might fail. Failure is totally fine, but you should never go into an experiment expecting to fail.
We use X tools
Similarly to the previous vanity metric, there are a lot of marketers out there talking about how many tools they use. I used to do this too.
Again, being able to use tools for efficiency purposes is great. But tools cannot and should not replace all skills. More tools isn’t always the answer.
There are a lot of small marketing teams that unnecessarily spend a fortune on fancy tools without even using 1% of the functionalities.
We’ve raised X in funding
Raising funds can be a great validation of your business and a sign that your company is a force to be reckoned with. But raising a lot of investment isn’t always a good thing.
Besides the fact that investment nearly always comes with relinquishing some control, it can also make your company less lean and tempt you to fix problems by pouring more money into the top of the funnel. It can also lead to over-valuing, in which case your startups will spend its existence running after expectations until the bubble bursts.
From a growth perspective, it also sounds better to achieve high levels of growth without funding. I’ve even heard marketers boasting about their revenue growth while comparing their post-funding metrics to their pre-funding ones. Another misleading comparison.