Do you have a solid understanding of your brands metrics or are you interpreting them all wrong?
Metrics are one of the most important tools for marketers. They can help to quantify results and analyse and assess the quality of products and services. Metrics can also provide clues as to how to approach a campaign and when to scale up and when to scale down.
Even though metrics can be a marketers best friend more often than not, metrics can be very misleading and can cause confusion and poor decision making.
Often marketers make decisions or changes based on metrics only to yield results that are less effective or not as expected.
In order to understand metrics, you really need to take a holistic approach and understand the common pitfalls that some marketers and brands make.
We have seen many companies waste hundreds, if not thousands of dollars chasing or responding to metrics that were misleading, so we have come up with some strategies to help avoid this problem.
Firstly it is important to understand that there are two types of metrics in the marketing world:
- Vanity Metrics
- Useful metrics
Vanity metrics are those metrics that make your website, product or service sound like it is the most popular in the world, however when it comes down to the bottom line, it doesn’t stand for much.
Eric Ries says it best-
“Vanity metrics make you feel good, but they don’t offer clear guidance for what to do.”
For example, a website could receive millions of hits per month. While this sounds amazing, there are other factors that really need to be taken into consideration as well such as, the conversion rates, time spent on site etc. etc. While most marketers know this, they still tend to fall into the trap of holding vanity metrics in high regard.
Let’s be clear, vanity metrics sound great, however they don’t really portray an accurate picture. You may have millions of hits per second, but that really doesn’t mean much unless you look at other factors.
Useful metrics as the name suggests, are metrics that actually paint a story and help you to understand your business and what is working or what is not working. Useful metrics also help you to make informed decisions about what to change and what strategies to implement.
Is your brand using vanity metrics or useful metrics to make decisions?
There are a few ways to determine if your brand is focusing on vanity metrics or useful metrics and we will explore these throughout this article.
There are other traps that marketers fall into when it comes to understanding and working with metrics.
Here are the top 5 mistakes marketers make when it comes to metrics and the areas that we believe marketers need to watch out for:
1. Using Traffic as a Metric
As we have already touched on, using traffic as a way to measure the success of your site can land you in hot water if you don’t know what you are looking at.
In fact, traffic results are one of the most commonly used metrics for marketers, particularly those in the content space, however relying on traffic alone is a huge mistake.
Traffic is definitely a vanity metric and this includes even good, high quality traffic as it is difficult to measure this on its own or use it in an effective way.
For a metric to be useful, it has to be something you can take action on. It has to be something that provides meaningful results to help you grow and scale your business into a highly profitable venture.
Let’s take a closer look at this-
What is a metric you can take action on?
A metric you can take action on is an actionable metric.
As the name suggests, an actionable metric allows you to take action based on the information that is provided to you. This action will allow you to see clear changes in your results and will have a direct “cause and effect”.
It is important to remember as well that your brand needs to have a goal before it looks at a metric for guidance. This helps your metric to actually serve a particular action or purpose.
For example, say your goal is to increase profits for the following month. By setting your goal you have then made it easier to narrow down which metrics you need to focus on. For this particular goal, there are a few metrics that may be of benefit such as:
- Total Revenue
- Total Profit
- Current Members/Current Customers
- Churn rate and Retention rate
Depending on your business model you may want to track all four of these metrics, or focus on a specific metric that is important to your brand.
Keep in mind however, you may need to take into consideration other metrics to determine why you may be losing or gaining customers for example. Remember, metrics are really holistic and sometimes you need to dig a little deeper to ensure you are receiving the full picture.
What if your goal is qualitative and not quantitative?
With the right tools profits can be easy to measure, but what about a less tangible goal like- making a positive and beneficial impact on the lives of your consumers?
This goal can be a little more difficult to track, however with the right metrics you will be able to work out if people are responding in a positive way to your products and services.
For example, you may want to study the following metrics for this goal-
- Average time spent on your brands website
- Customer satisfaction surveys or reviews of your products or services
- Return visitor/customer return percentage
- Social media shares or follows
Marketers often rely on vanity metrics to determine whether customers are enjoying their products or services, however relying on reviews, surveys and how frequently a visitor or customer returns can be far more effective (we will touch on this more later).
2. Relying on One Metric to Paint the Whole Picture
The only way you can tell if your marketing strategy is having a positive effect on your brand is to look at the bigger picture.
This is the most common pitfall marketers make so we can’t stress enough that you need to learn how to look at your metrics in an objective and holistic way.
For example, lets say you are tracking customers satisfaction rates for your brands product or service.
Looking at your metrics, you may see that customer satisfaction has increased. This of course is excellent news, but lets look a little deeper. Let’s look at the bigger picture and see if we can reveal more information behind this.
The bigger picture tells us that while customer satisfaction rates went up, the number of customers in total went down. This therefore explains why satisfaction rates may have risen- the unhappy customers simply left.
Without digging a little deeper, this could have gone unnoticed and landed the business into some serious trouble down the track.
This just goes to show that you cannot select one or even two metrics and receive an accurate portrayal of what is going on. Just the same however, you cannot show 100 metrics and expect to understand what is going on either.
When it comes to metrics, it really needs to be clear and concise, but also accurate.
The best way to approach this is to have a few metrics that offer you actionable information so you can actually make an informed decision on what to improve and what to change.
The metrics that you choose will of course depend on your goal, however we highly recommend that marketers take a look at-
1. Qualified Leads
2. Actual Sales
A Qualified Lead is someone who signs up or participates in a free product or service that you offer, such as a webinar. You can assume that the lead is “qualified” because they are obviously interested enough to hear what your business has to offer and could very likely become a paying customer.
Looking at qualified leads is far more “actionable” when it comes to measuring the success of your webinar, rather than simply focusing on the number of people that signed up.
Why?
Some people who signed up may not show up, are actually not that interested or are simply looking for free information and have no desire to purchase anything.
You may run a webinar with millions of sign ups, however if you have no qualified leads, then unfortunately it is likely that your webinar is not going to yield your business positive results.
Looking at Actual Sales is another great way to measure the success of your marketing. Of course, this is an obvious one as the more people are buying your products and services, the more you can assume you are doing something right.
In fact, out of all the metrics, actual sales are the most revealing. The unfortunate part is however, you have to look at other metrics surrounding actual sales to see how you can improve the results.
3. Trying to Measure Everything
Try as you might, you cannot measure every little factor and every little piece of data that your business receives, however you can focus on some key metrics that can help turn your business into a well oiled machine.
As we have already touched on, there are two main types of data that your brand is likely going to want to measure-
1. Quantitative data: eg. number of customers, profits, sales etc.
2. Qualitative data: eg. customer satisfaction etc.
Quantitative data can be easier to measure than qualitative, however if you can’t find the perfect metric to measure what you are looking for, you need to get creative and move on to the next best thing.
For example, lets say your brand has not made any sales in a while and you want to see why. When you don’t have any sales data to measure or analyse, it can be difficult to understand it, so you move on to the next best thing which in this case would be your leads.
Are your leads simply signing up for your freebies and then ditching you? Are your leads not the right demographic for your products or services?
By assessing what your leads are doing it will give you the best possible insight into your sales and how you can get your leads converting into paying customers.
When it comes to qualitative data the process can be the same, you may not have the exact metric that can reveal to you all that you desire, but there is always the next best thing.
Say you are trying to measure how happy your customers are with your service. We already talked about surveys and reviews being the best way to measure this, but there could be some biases with this as well.
For example, a lot of the time unhappy customers are more likely to speak up than happy customers and this can skew your results.
In order to get clearer results, you may want to also look at customer return rates and your churn through rates to see if you can work out how your average customer feels about your services or products.
While this may not give you an exact statistic, you have to remember that it is not always possible to measure every little thing.
The other thing to remember when it comes to measuring metrics is that sometimes the best decisions can be made on gut feeling alone. You may have all the data in the world pointing to something, but sometimes following your instincts can also yield pleasing results.
Part of the fun of being a marketer is being creative and sometimes getting too bogged down in statistics and numbers can inhibit this process.
While we are not suggesting you should do everything on a whim, sometimes getting creative can take you to places your numbers may not be able to.
4. Manipulating Metrics to Measure Success
Metrics can be easily manipulated. For example, a study was done on employees who were rewarded based on metrics. The more they sold, the more they reached their quotas and the more they served customers, the more they were rewarded.
While this sounds all well and good, employees started to get savvy and learnt how to manipulate these metrics. They made their soul focus centred around the metrics and lost sight of everything else that was important on the job.
The same effect can happen with your marketing. Metrics can be manipulated to yield the results that you want to see, and not what is really happening.
To explain, lets take a look at social shares for example.
If you told your social media employee to increase the amount of shares that their posts received, that employee may decide to pay for fake shares, ask their friends to share, or simply log onto multiple devices and share the post themselves.
This may make the social media post look like it has far more shares, however because the shares were manipulated it won’t actually yield your brand actionable results.
A smart marketer may catch on to this, however if they are simply focused on vanity metrics, this could very well go undetected.
While this doesn’t mean you can’t measure your employees or your campaigns using metrics, it does mean that you have to look at the bigger picture in order to gain the right perspective.
Manipulating metrics also applies to buying cheap traffic. You may buy the cheapest traffic on the market, however it is likely that traffic is not going to turn into qualified leads or sales in the long run.
Manipulating metrics can be easy to do, so as a marketer or business owner you need to be savvy to this and not fall into the trap of measuring these statistics as real results.
When you know what to look for however, it can help you to quickly assess the performance of your company and where you need to make improvements to your marketing strategies.
5. Not Understanding Statistics
One of the problems facing marketers today when it comes to understanding metrics is that they have no idea about statistics.
All marketers should have a basic understanding of statistics including the concept of variance.
What is Variance?
According to Stat Trek, Variance is-
“A numerical value used to indicate how widely individuals in a group vary. If individual observations vary greatly from the group mean, the variance is big; and vice versa.”
Basically, variance measures how far results can deviate from the expected result.
For example, a sales email that you send out may be opened by 100 people and 5 of them follow through to purchase.
Does that mean that from now on you will get 5 people purchasing your products for every 100 emails you send? Of course not. This number may vary every single time.
As you collect more data, you will be able to draw out averages and determine the average percentage for every email you send however, there will always be variances.
You can learn to measure these variances and make them work in a positive way for your brand and marketing.
Having a basic understanding of statistics is important as this will help you to know how to interpret metrics and how to properly assess them for the most accurate results.
Learning how to accurately judge your metrics is definitely a skill that all marketers will acquire with some patience and effort. The most important thing is to be aware that your metrics may not be all that they seem to be. With having this awareness, you are more likely to catch any discrepancies and view your metrics as part of a bigger picture and not just on their own.
To help, we have broken down the process of assessing metrics in 5 simple steps:
1. The first step to assessing your metrics is to work out what your goal is. Once you have clearly stated your goal you can more accurately understand what you are looking for.
2. With your goal in mind, determine the primary metric that is related to your goal. Even though there may be more than one, try to narrow it down to the most important metric. This will help you to create a focus.
3. Once you have selected the most important metric, assess it by brainstorming possible situations where your metric may not be representing the full picture. You may have to look at other metrics in this step in order to determine what is really going on. This process can get overwhelming, so stick to looking at data that is actionable.
4. After brainstorming, select one or two of the other metrics that you determined as being important when looking at your goal. These metrics will become your safeguards and will help you to quickly know what to look for when you are tracking your goal.
5. Write everything down and then continue tracking your metrics on a regular basis. You may also want to make a spread sheet that has your goal as the focus and the metrics that you are tracking to determine whether your goal is being achieved or not.
This strategy will help you to develop a clearer picture behind your metrics and will help you to draw a more accurate conclusion when it comes to assessing the success of your marketing campaign.
Conclusion
When understood, metrics give you the confidence to increase your spending on a particular campaign and help you to make decisions that will hopefully lead to higher profits and sales.
For this reason, it is crucial to understand metrics and know how to choose the right metrics to assess and base your actions from. This helps you to avoid drawing conclusions that are inaccurate and are bad for business as whole.
By observing these five common mistakes, you will be well on your way to ensuring that your understanding of metrics is solid and helping you to achieve the best possible results.
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