Vanity Metrics vs Actionable Metrics: A Guide to Making Smarter Decisions

As the name suggests, vanity metrics look impressive at first glance but have little substantial value. The tricky thing about understanding the difference between vanity metrics vs actionable metrics is that one business's vanity metrics can be another business's actionable metrics and vice versa. The phrase "one man's trash is another man's treasure" comes to mind.

For an e-commerce store, the time a user spends on a website is meaningless if there's no engagement (it doesn't translate to dollars), but for a streaming service like Netflix or YouTube, it's pure gold.

Time also plays a role – today's vanity metrics could become tomorrow's core metrics. There was a time when only hardcore software engineers would obsess over page load speed. Today, large e-commerce stores can lose millions of dollars annually for lags measured in milliseconds.

Early-stage startups are and should be over the moon with a spike in new user signups. Mature companies would do better to focus on customer lifetime value and monthly active users instead. If you’re curious about what early-stage startups should prioritize, check out our detailed breakdown of foundational metrics.

Understanding which metrics a business needs to track is crucial for growth, and in this blog we'll explain how you can cut through the noise and pick the right metrics for your business's needs. Our team at brigit.dev created this guide to help your business navigate the often confusing world of metric selection and measurement.

Why are Metrics Important

Metrics let decision-makers get a read on a company's pulse and act accordingly. They allow the people in charge to allocate resources, catch potential problems, and validate decisions.

However, there are metric-related traps businesses can fall into.The "shadow success" phenomenon is a good example. An increase in site visits should be good news for any business. But is it? If site visits are increasing but conversions are decreasing, is the increase in visits a sign of healthy growth, or does it signal a drop in the quality of audience targeting?

Another subtle, often ignored issue is the cost of tracking too many metrics. Each new data point a business tracks can create noise that drowns out critical signals. Tracking too many metrics leads to confusion and unnecessary disagreements and is comparable to adding instruments to an orchestra without considering whether they're playing in harmony.

Finally, an often overlooked yet nasty issue is the cultural impact. When teams are overburdened with showing great numbers, they're usually incentivized to sacrifice long-term results in favor of short-term ones. For a deeper dive into the risks SaaS companies face and how metrics play a role in success or failure, take a look at this blog post on the subject.

To avoid such issues, businesses must first get a grip on which metrics matter and which make us feel good while leading us astray.

Identifying Vanity Metrics

When deciding which metrics matter, ask yourself a few questions to separate the wheat from the chaff. First, ask yourself whether what you're measuring can drive a business decision.

Imagine you're launching an email campaign for a new product. A metric measuring the raw email list size can seem impressive, but can the number help you make decisions down the line? Contrast that to something like an engagement rate that can help you adjust subject lines, sending times, and content strategy.

The second thing you should look for is whether you have control over the variables that lead to the outcome you're measuring. Can you consistently reproduce results?

For example, if you launch a mobile game and it blows up on the App Store because a celebrity randomly tweeted about it, is this something you can expect to repeat systematically? Not really. In this regard, a good choice for a mobile game would be measuring player retention rates because you know they'll respond to specific game improvements.

Finally, you need to make sure that what you're measuring reflects genuine value and isn't easily manipulated. Take website traffic from paid ads. Sure, you can quickly boost traffic numbers by increasing ad spend. But does this increase conversion rates or lower customer acquisition costs, which should be the end goal?

Your one takeaway from this text should be to remember to identify metrics that not only look good but actually help your business grow and improve. By focusing on these three questions, you can build a foundation of meaningful metrics that drive value rather than just stroking egos.

Actionable Metrics for SaaS Companies

Check in with any SaaS business and ask what metrics they track. Odds are you'd get a list that's as long as their product's terms and conditions.

A lot of these are comparable to impulse buys you make when you're at the supermarket. Just like you don't need to reach for that Mars bar when you're at the checkout, not every metric deserves your attention.

Actionable metrics deserve your attention. They're the ones that draw a clear line between what you do and what happens as a result.

Think of trial-to-paid conversions, for example. This metric quantifies how well your product convinces free trial users to reach for their wallets. A drop can tell you to examine your onboarding process, pricing strategy, or feature usability.

Cart abandonment rate is a frustrating metric, but it can lead you to investigate your checkout process and payment options.

Customer lifetime value sounds very long-term, but it can actually lead you to issues that can and need to be fixed quickly. A declining CLV is a wake-up call to rethink your customer success program, adjust your pricing tiers, or improve product features. For additional strategies on scaling SaaS businesses effectively check out this blog.

A common thread for each of these actionable metrics is that they're all tied to specific aspects of your business you can control and improve. They align teams around concrete objectives.

Instead of chasing vanity metrics like total signups, you can focus your sales and marketing campaigns on qualified leads that convert, while your product team optimizes features that retain existing customers. Setting good metrics means measuring what matters and, even more importantly, what you can influence.

Transforming Vanity Metrics Into Actionable Insights

While focusing on the wrong metrics is a slippery slope, the good news is that, with the right approach, it's easy to pivot from superficial to actionable data. Adding context and deeper analysis to surface-level metrics is key.

Take website traffic that, when viewed in isolation, is often a vanity metric. However, if you segment the visitors based on acquisition channels, device types, and behavioral patterns, you can gain insights about which of your marketing campaigns are resonating with your target audience.

Instead of celebrating raw visitor numbers, analyze how different segments interact with your content and move through your conversion funnel.

The number of social media followers shouldn't be viewed in isolation either. But if you focus on engagement rates, sharing patterns, and the quality of interactions, you'll get a pulse on how effective your content is. This helps you plan out a content strategy that's in line with business objectives.

Page views can also become actionable if you pair them with engagement indicators like bounce rates, time on the page, and scroll depth. These combinations help identify content that captures interest versus content that needs optimization.

As you can see, creating actionable metrics from vanity metrics often doesn't require new tools – just a more nuanced analysis of the data you already have.

Common Mistakes in Metric Tracking

It's not uncommon, even for well-established businesses, to fall prey to mistakes in tracking metrics.

Analysis paralysis is one such mistake. Teams get so hell-bent on tracking everything that they lose the ability to make decisions as they're overwhelmed by the amount of data. Like an overcrowded orchestra, too many instruments can create disarray instead of harmony.

Another issue that pops up is teams not having a defined process for turning metrics into action. Stunning dashboards are useless if people aren't equipped to interpret the data and take charge based on the story the data is telling.

Businesses often struggle with metric alignment as well, meaning that they sometimes track the same metrics regardless of the growth phase the company is in. Remember, what works for an enterprise might be useless for a startup and vice versa.

Perhaps the most dangerous issue is a sort of metric myopia, where businesses become so hung up on improving particular numbers that they lose sight of their long-term strategic vision. This leads to short-term gains at the expense of long-term success.

Companies make these mistakes often, but as long as they're caught on time and corrected, no harm's done.

Addressing Common Mistakes

So, how do we address the common issues laid out in the previous segment?

Well, to overcome analysis paralysis, you can start by identifying your North Star Metrics—the key indicators relevant to your company's current business stage and goals. Think of finding these like decluttering your home. For most businesses, focusing on just the top 5-7 core metrics at a time that drive most of your decisions is optimal.

To turn data into action, you need to establish a framework for interpretation and responses. A good start is to set up regular review sessions where teams don't just present the numbers but discuss the actions they'll take based on the data. After that, you can consider creating a playbook containing predetermined responses to changes. Sort of like, if metric X drops by Y percent what are 2-3 things we need to investigate first.

For metric alignment issues, you should consistently audit your metrics against the phase and goals of your business. Take social media metrics. What matters for a new brand building awareness differs greatly from what an established company needs to track.

Schedule quarterly reviews to see whether what you're measuring remains relevant to your company's current stage and objectives. What worked last year might not work this year. So consider creating a metric lifecycle plan that evolves as your business grows.

To prevent metric myopia, you should think of your metrics like a balanced diet. Be sure what you're taking in now is good for you in the long run as well. Pair each short-term metric with a corresponding long-term one.

As an example, while tracking daily active users (short-term), also monitor monthly user retention (long-term). If you're measuring sales conversions (short-term), pair it with customer lifetime value (long-term).

For SaaS companies, this might mean balancing new trial signups against monthly recurring revenue and long-term retention rates. This kind of approach helps divert teams from chasing quick wins (like optimizing for trial signups) at the expense of lasting success (whether those users stick around).

Conclusion

In this blog, we've defined vanity metrics and showed you how to turn them into actionable insights. Hopefully, you've learned that whether you need to measure something depends heavily on context – the stage your business is in and the goals you want to achieve.

To continue with our orchestra analogy, just as a conductor selects which instruments to highlight based on the piece being played, you need to choose metrics that align with your current business goals.

Something that works for Netflix won't work for an e-commerce store. Similarly, if something works for a startup, it likely doesn't mean anything for an enterprise.

Meaningful metrics have little to do with sophisticated tools and pretty dashboards. Asking the right questions, providing proper context, and ensuring every metric you track can lead to actionable decisions are what will propel your business forward.

By avoiding common traps and maintaining a balanced approach between short-term and long-term success metrics, you'll hit that sweet spot where you know how your business is doing but understand where you need to go next.