What is a vanity metric?

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A vanity metric is some piece of information or statistic about your digital marketing that might make you feel good, but in reality means nothing to your business success. They are the sort of things people like to boast about like their massive Instagram following or their number one ranking on Google for a keyword. But these metrics don’t necessarily result in customers purchasing your product or service. So if these metrics don’t necessarily equate to customers and profit, why do we care about them so much?

Some of the classic vanity metrics are:

  • website hits
  • search engine rankings
  • social media followers
  • social media post likes

That’s not to say these metrics are meaningless. But on their own they don’t equate to generating real business.

Your website could be receiving thousands upon thousand of visitors. You might see that traffic has grown over the last year by 200%. But was that traffic actually interested in your product or service? Did they stay on your website for long? Did they complete an action you wanted them to take? If your website is not doing the job of converting those hits into customers, it IS meaningless.

What we should be boasting about is:

  • leads captured (usually an email address to start with)
  • conversion rate
  • cost per acquisition
  • customer lifetime value

Leads captured

A lead is someone who has been willing to hand over their contact details to express an interest in your product, service or some kind of offer you have on your website. That might be via an enquiry form, an email or a phone call.

Having a way to measure not only the number of leads you capture, but the source of those leads is imperative. This is very different to measuring where your traffic comes from. You could get a stack of traffic coming to your blog via social media, but is that traffic creating leads for you or are they bouncing straight back to their social feeds?

At Pixeld we offer a free website analysis to potential customers. Customers express their interest by leaving their contact details and website address. We have also in the past have offered downloads like templates or checklists with an email subscription. These form a part of our lead generation strategy.

You might assume more traffic to your site means more leads. If you don’t understand what kind of customer becomes a lead, you will waste time and money on channels that don’t drive growth.

So ignore the vanity metric of visitors to your site, and focus on leads captured.

Conversion rate

The next step is measuring how well your website is performing at capturing leads or sales. This is known as a conversion rate. One example might be leads generated / page visitors. So if one hundred people visit the Pixeld free website analysis page, and ten actually fill out the form, we have a ten percent conversion rate.

There are some general average conversion rates that you can aspire to, but really every industry and website is different. What you can use this metric for is comparing your various offers, landing pages, calls to action, button colours, etc. against each other. Once you have worked out your conversion rate, you have a benchmark to improve upon going forward. Make small changes, one at a time and measure the impact they have on your conversion rate.

Cost per acquisition (CPA)

Hopefully you have control over how much you are spending on your digital marketing. Divide this by the number of customers you have acquired and you have the cost per acquisition.

Even nicer is if you can break down your cost per acquisition for channels like Google Adwords and Facebook Advertising. This can help you determine whether you should spend more or less money on those channels.

How much you are willing to spend to acquire a new customer is different from business to business. Ultimately it has to be less than the revenue they will generate for you, but how much less is up to you. For a website project Pixeld can afford a relatively high CPA in comparison to say a jewellery retailer where the average purchase price might be just twenty dollars.

You might also have to consider more than the immediate purchase value. A customer’s repeat business might be worth a lot more to you in the long run.

Customer lifetime value (CLV)

You will need a bit of historical data for this one. A customer’s lifetime value to your business is the average profit you will make per customer over the entire life of your relationship.

For Pixeld we might start a new website project for a client, but they will also need website hosting and support on a monthly basis, perhaps some marketing down the track or an upgrade to the website. All of these things add to the lifetime value and should be considered when you are working out how much you are willing to spend per acquisition. The lifetime value could be many times that of the original purchase.

Another project of ours is a monthly software subscription. The monthly fee is quite small, so it seems ridiculous to spend a month or twos worth of subscription fees just to acquire a new customer. But the average life of our customers exceeds 12 months so it actually makes sense to do so.

Actionable metrics are better than vanity metrics

These metrics allow you to make informed decisions to better your digital marketing efforts. They allow you to take actions to grow. It’s definitely a lot more work monitoring these metrics and then actually doing something about them, but this is what digital marketing is really all about. Develop, analyse, revise.


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