What are Vanity Metrics? Are you tracking Vanity Metrics or Actionable Data? Hiten Shah, CEO of KISSmetrics, posed this and other juicy questions to the 150-ish attendees of a recent San Diego Tech Founders Meetup.
Hiten spent the evening opening the eyes of the #leanstartup audience by telling engaging stories about which web analytics (really) matter. And why. And which web analytics are metrics that simply make you “feel better”. (Like the ever-popular, “number of unique website visitors”).
Hiten’s Web Analytics–Metrics Rule:
If the key web analytic (metric) that you follow went up or down 20%, what would you do?
Hint: if the answer is “nothing”, then according to Hiten, you’re tracking a Vanity Metric. Not Actionable Data.
Surprisingly (since I am so not technical or metrics-oriented) I enjoyed Hiten’s analytics presentation a lot. Among others, we learned the difference between Vanity Metrics and Actionable Data: Actionable Data allows you to make (smart) decisions about increasing the number of site visitors that become your customers.
What is a “Vanity Metric”?
A Vanity Metric is a number that’s easy to track but does nothing to help you predict success with your online business. (i.e., how many unique visitors you had last month)
Here’s more on the problem with Vanity Metrics according to Eric Ries, author and founder of the LeanStartup movement:
“The only metrics that entrepreneurs should invest energy in collecting are those that help them make decisions. Unfortunately, the majority of data available in off-the-shelf analytics packages are what I call Vanity Metrics. They might make you feel good, but they don’t offer clear guidance for what to do.”
Source: Guest post by Eric Ries, on the Tim Ferris Four Hour Work Week Blog
Finding Actionable Data
If taking a deep dive into the guts of web analytics is about as appealing as doing your taxes, I’m with you. But, we all need to get a handle on the site metrics (web analytics) that really reflect our customers’ satisfaction with our site. And we want to drive more visitors to become customers.
So the gist of it is, by focusing on Vanity Metrics you risk missing out on clues to your customers’ view of your products. You may miss opportunities to make site or product changes that lead to increased sales! Or, happy customers.
What Is a “Happy” Customer?
Here’s a (startling) thought Hiten shared about how online businesses can describe a “happy customer”. He calls it the point of “activation”. Now you might say that the first time you have a “happy customer” is when they sign up for a newsletter on your site or maybe make a purchase.
Hiten s has a different view of happy customers. They believe it’s when your customer first experiences the primary benefit from your product. They call it “activation”.
- A happy customer, or activation, happens when she enjoys the benefit of your product for the first time. Not when she simply signs up for something.
- Activations (happy customers) are more important than sign ups. Why? Because it’s the first time the customer experiences the value of your offer. The first time they experience your product’s primary benefit.
Can You Define Your Happy Customer?
Can you actually define the exact point when your customer first experiences the primary benefit of your product? The KISSmetrics folks think so.
Hiten gave some “activation” examples. He highlighted a few San Diego-based startups to illustrate how you can determine your customers’ “happy” point.
– If you host an online exchange, like Paygr, activation might be the point at which a customer sells their first product. Not when they simply sign up as a seller.
– If you’re PRLeap.com, a social media press release distribution company, it might be the first time your customer’s release gets a social media interaction. Or is Tweeted.
– Take Lessons is an online service matching carefully pre-screened music instructors and music students. TakeLessons.com might have an activation point that occurs when both the student and the teacher are satisfied with the matchup.
‘Your Mission’ Image: Digital Telepathy blog
Analytics + Your Key Performance Indicators
Many of us install Google’s free Web Analytics package on our sites to track the number of visitors and other metrics. Congratulations if you’re using Google Analytics. It’s a good first step! Click here to check out Google Analytics (I won’t tell anyone) if you’re just now getting onboard.
But wait, there’s more…
According to design experts like the website User Experience guys at Digital Telepathy, you’re missing out on the kinds of insights about your site visitors that can help you take action to convert more visitors to customers.
Digital Telepathy recommends that the next step is to come up with your:
…must-track analytics, called Key Performance Indicators (KPIs), that you should be watching to see how successful your efforts are.
You can read more about how to find and track your unique KPIs at the @dtelelpathy blog post here: Spy Strategies for Web Design: Analytics
And let me know in the comments–call it true confessions–if you’re still tracking vanity metrics. Or if you’ve seen the light and have your own Key Performance Indicators!
If you’re a Southern California startup or small business check out the #Leanstartup group, San Diego Tech Founders Meetup.
Thanks to our Meetup Sponsors
Thanks to Brant Cooper, our San Diego Tech Founders Meetup organizer. In his spare time, Brant speaks, gives workshops on LeanStartups, and blogs at Market by Numbers.
Also, a big shout out to the great sponsors for bringing Hiten Shah to speak to us.
Digital Telepathy, designers of web sites that deliver big results, like the site for Tim Ferris’ book, The Four Hour Body.
Cooley, law firm to Zynga (social games) among other hot startups and cool Android app developer, FLUD.
Photo image: iStock
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