There is a big difference actionable metrics and vanity metrics. Vanity metrics are defined as page-views, number of attendees at an event, Twitter followers or Facebook likes. They might make you feel good, but they do not result in any action to grow business.
The number of your visitors, subscribers, and followers are not totally meaningless, but they are not what you should be spending the majority of your time or energy on. If you worry that you do not have as many Twitter followers as another, remember that many sites become internet famous for the cost of purchasing online databases of ‘followers’ that do not exist.
You can be ahead of the game if you look at revenue creation through a more scientific, more accurate model defined by actionable metrics. Ask yourself what creates revenue for your business and how that information can be used to encourage further growth. This will give you ideal sales opportunities, a shared sales and marketing goal. By using actionable metrics and the smart use of vanity metrics, you can save your business unnecessary waste in time and money on marketing leads that are not converted to a sales opportunity.
While vanity metrics may make us feel better as marketers, real business value comes from defining actionable metrics, and acting on them.
To define actionable metrics with regards to your enterprise, begin with your business model. You may be delighted that your revenues have increased on your eCommerce site, but if you do not know why, this is a vanity metric.
To identify actionable metrics your business model may have a baseline of revenue. When you introduce a new website design for a section of your website with improved images and more information about those products, and revenues for those products are up by a significant percentage when compared to the same period last year, then revenue is an actionable metric. What this means is that there is an obvious action to be taken: to apply that new website design to the remainder of your website.
For a business-to-business company, and companies where transactions take place offline, common metrics can include Sales Qualified Leads (SQLs) and Revenue Pipeline. These too need context, so that you have a full understanding as to what changes (actions) taken lead to an increase in SQLs or the amount of business you expect to receive in the coming months or year.
For non-profit organisations, you will want to measure donations and planned giving. Targeting previous donors who may have already given generously or those who are new to the charity may be a heavy-handed approach not appreciated. A more skilled approach looks for the leading indicators of giving or increased giving and establishes metrics around those leading indicators. This can include increased attendance at events or number of hours given through volunteering.
Also look at actionable metrics that look at the cost side of your business model, as well as the revenue side. Measure gross margin by customer or by transaction.
Vanity metrics can provide leading indicators to direct further actionable metrics. An increase in page-views can lead you to look for what users do next and how many are returning to the site. A low return-rate may indicate a need for more usable content, and an increase in returning users may indicate that you are getting more engagement, which in turn may lead to more conversions. Trace visitors and find out what is driving traffic to your website.
With Twitter, see which followers are re-tweeting your tweets and which tweets are getting re-tweeted. Note which attendees at events buy from you and also define how attendees interact after an event. This can help you find the actions to take to increase the conversion rate of attendees, moving from feel-good vanity metrics to actionable metrics.
You can use actionable metrics to answer your biggest unanswered questions about your customers or prospects. One example would be to define where your customers with the highest gross margin are coming from or which campaigns provide the most efficient source of leads.