It’s no secret that vanity metrics can be extremely misleading when it comes to determining the performance of your startup, whether you’re pitching investors or just trying to determine where you stand.
While getting excited about impressive numbers like awards, interviews, email signups and page views may seem appealing at first, they are not a good measure of success. You need to be aware of the long-term implications these numbers can have on your business and instead focus on impactful metrics that truly measure customer value and progress.
One of the biggest problems with vanity metrics is that they often only look at a small slice of your overall user base. For example, if you are measuring page views, you might be focusing on a specific subset of your users, like those who visit your website frequently or have purchased items in the past. But this may not tell you much about how most of your customers view or interact with your business. Instead, it is more important to look at metrics that reflect the full range of user behaviour, like retention rates and customer lifetime value.
Another issue with vanity metrics is that they can often be misleading or inflated, due to factors like skewed demographics or short-term spikes in activity. For example, if you are measuring unique visitors on your website and notice a sudden spike in activity from one particular country, this may not necessarily indicate a meaningful increase in customer interest or demand. In order to get a more accurate picture of your business performance, it is important to analyze real data, rather than focusing too heavily on vanity metrics.
Vanity metrics, such as awards and press coverage, may make you feel better but they are not useful unless they actually result in sales or increase traction. To get traction as a startup, you need to have a plan for converting top-of-funnel metrics like email sign-ups, website traffic, and social media followers into actual customers. Without a concrete plan for doing this, these metrics are merely hopes, wishes, and dreams, rather than the foundations of a company.
As a startup founder or entrepreneur, it can be challenging to ignore the allure of vanity metrics and focus on more meaningful data. But ultimately, it is these key performance indicators that will determine your success in the long term. So be sure to prioritize impactful metrics like revenue growth, customer satisfaction, and user engagement as you work to build a thriving business.
Vanity metrics are a trap that many startups fall into. And you are allowed to be enticed by them, especially when you see huge spikes and seemingly impressive numbers. However, always remember that these metrics are not an accurate reflection of your business’s performance.
The Madam.VC editorial team is made up of professionals in venture capital and private equity, who are passionate about technology and the visions of founders who change the world around us. We bring these themes together to provide news, analysis, events and resources in order to close the funding gap for women.