Vanity metrics are measurements that may *create the illusion of success but provide little to no actionable insight for decision-making*. They often showcase large, impressive numbers without a direct connection to business growth or customer value. Common examples include total site visits, registered users, or app downloads—figures that might look good in reports but fail to indicate whether the business is truly improving. >[!quote] > Vanity Metrics might make you feel good, but they don’t offer clear guidance for what to do ### Why Vanity Metrics Are Misleading - **Lack of Actionability**: They do not provide a clear link between an initiative and its impact, making it difficult to determine what actually drives success. - **[[Cognitive Biases|Cognitive Bias]] in Interpretation**: Teams often attribute positive vanity metrics to their own efforts while blaming external factors for declines. - **No Causal Insights**: They fail to establish cause-and-effect relationships, leading to assumptions rather than informed decisions. - **Obscured Business Value**: A metric like "total downloads" does not indicate retention, engagement, or revenue generation. ### Vanity Metrics vs. Actionable Metrics Unlike vanity metrics, actionable metrics directly inform decision-making. They: - **Demonstrate clear cause and effect** (e.g., conversion rates improving after achieving [[Statistical Significance in A-B Testing]]). - **Are unbiased and reliable**, reducing cognitive biases in decision-making. - **Drive business results**, ensuring that efforts lead to measurable growth and profitability. ### Strategies to Avoid Vanity Metrics 1. **Identify Meaningful Metrics**: Focus on KPIs that reflect business success, such as [[Customer Lifetime Value (CLV or LTV)]]. 2. **Ensure Statistical Significance**: Use controlled experiments (A/B testing) to validate assumptions ([[Statistical Significance in A-B Testing]]). 3. **Tie Metrics to Business Goals**: Measure outcomes that align with actual company performance and sustainability. >[!Example]- Hockey stick graph as a Vanity Metric > ![[Hockey stick Vanity Metrics.png]] --- ## References > "Companies of any size that have a working engine of growth can come to rely on the wrong kind of metrics to guide their actions. […] Energy invested in success theater is energy that could have been used to help build a sustainable business. I call the traditional numbers used to judge startups 'vanity metrics' - [Eric Ries, The Lean Startup](https://www.goodreads.com/book/show/10127019-the-lean-startup) - [Lessons Learned: Why vanity metrics are dangerous](http://www.startuplessonslearned.com/2009/12/why-vanity-metrics-are-dangerous.html) - [Vanity Metrics vs. Actionable Metrics - Guest Post by Eric Ries - The Blog of Author Tim Ferriss](https://tim.blog/2009/05/19/vanity-metrics-vs-actionable-metrics/)