Vanity Metrics Don’t Predict Growth

Counting Trucks: Avoid the vanity metrics, and find the actionable metrics that drive business

“You can’t manage what you can’t measure.” Or so the old adage goes. But that’s not quite true. Not all measures are worth managing.

Management guru and statistician, Edward Deming is often cited for the quote, “You can’t manage what you can’t measure.” But according to his Wikipedia bio, this famous pearl of wisdom was not his. Deming actually proclaimed, “one of the seven deadly diseases of management is running a company on visible figures alone.”

Long before Google Analytics, Facebook Insights and Big Data, Deming was guiding management teams to choose their metrics wisely.

Not all data is good data.

Good metrics are simple

Last year I attended a family business conference. One of the speakers, the President of a mid-size distribution company, recounted a story of how his Dad monitored the health of their business.

Every day at 3 p.m. his father visited the loading docks. He would walk along the bays chatting with the staff, and then walk out into the parking lot to count the trucks.

His father judged the health of their business by counting trucks.

The speaker shared his father’s simple formula for managing the business, “More trucks meant a healthy business. Empty loading bays meant tough times were coming.” His father could spot a budgeting or forecasting problem before the accountants based on his daily inspections.

Connect metrics to behaviors

The link between the volume of trucks in a distributor and sales performance is an obvious one. More trucks means more product is being shipped, which directly drives the business. But not all metrics are as obvious as counting trucks.

The challenge is we are inundated with metrics that seem purposeful and useful, but aren’t directly connected to business behaviors:

  • How does the number of Likes on your Facebook Page or Followers on Twitter connect to generating sales leads?
  • How does your Klout or Kred scores of social influence connect with marketing outcomes? And does social influence even matter?
  • Does the number of visitors to your website connect to anything that drives your business?

If you can’t connect a metric to a tangible business result, chances are it’s a vanity metric. It’s the connections that count. A metric that doesn’t connect to a behavior is of very limited value.

You can continue to monitor these metrics, but you have to ask why? What does the metric connect to, and what does it help you manage or predict?

Look for 3 to 5 ‘Big Levers’

Start with the behaviors. There’s no shortage of data you can monitor and analyze, but what metrics are connected with behaviors that drive the business?

Look for your proverbial trucks. What behaviors lead to future successes?

Try to find 3 to 5 very purposeful measures to manage your business and marketing by. These are the Big Levers that drive your business.

When you know your Big Levers you can make better decisions and adjust course more proactively.

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