But after a few months, we began to notice something: Many of these downloads weren’t actually leading to fully qualified, revenue-generating users. Our brand power was strong enough to get people to sign up, but when it came to long-term engagement and retention, we weren’t where we needed to be. We didn’t want to be the app you’d rather have and not need than need and not have. We needed to be a functional staple of people’s event planning and travel lifestyle. We realized then that, when it came to actually building a sustainable business, these vanity metrics were almost completely useless on their own. To have any value at all, they needed to be presented alongside percentages of users converted, retention rates, and other key performance indicators that could tell us not only where our users are coming from, but also which ones were staying on for significant lengths of time.
The Importance of Digging Deeper
To gain traction, startups must be able to quickly recognize the best sources of consistent customers. One of the biggest problems with focusing on vanity metrics is that it causes you to overlook the systemic patterns and trends in your business that can lead you to these sources. For instance, when we began to go beyond vanity metrics to see where our business truly stood, we quickly saw a big difference in the conversion and retention segments of our members — especially when it came to social media campaigns. Sure, we could usually get a user for one or two dollars. But these would often be fringe users, such as young girls in Russia or grandparents in China — not really the type to stick around. It pumped up our total download numbers but did nothing for us in the long term. Instead, we learned early on which marketing channels worked for us by forcing each new member to tell us how they heard about us. Our system would even detect common words and phrases — such as “Instagram” — and get the member to provide the name of the Instagram account itself. That process was necessary for us to track effectiveness of our advertising dollars or ambassador’s efforts. What we found was that a post shared by a nightclub promoter generated more valuable and engaged members than a post by a random travel blog — even if that blog had millions of followers and gave us tens of thousands of downloads.
How to Focus on the Right Numbers
Dismissing vanity metrics is easy; the hard part is focusing on the right numbers that are meaningful to your business. We used three main strategies to keep our focus — and the focus of our investors — where it needed to be: Vanity metrics are great for the “wow” factor. But when it comes to building a financially viable customer base, they just don’t cut it. Don’t let you your investors be fooled by these superficial numbers: Dig deeper, and you’ll find the true value of your company just underneath the surface.
