Some marketers are the worst at tracking the right metrics. The most notable thing is a little something called ‘Vanity Metrics’. To summarise, Vanity metrics are metrics that to an uneducated person can look really good, however in most cases they are just hot air. As you’ll see below not all metrics are good for analysis which is why they’re called vanity metrics.
Revenue is Vanity, Profit is Sanity
One good example of a vanity metric is revenue. When you’re only tracking revenue you’re not considering your operating costs, physical costs and product costs which can greatly reduce your margins. To put this into perspective, if you’re promoting a product and it costs you £1 per click in a PPC campaign and it takes you 50 clicks to make a sale of £100 while your profit is £20 (assuming a 20% margin), you’ll actually be £30 under. So instead of just looking at revenue you should consider profit instead.
The next one is probably something that every social media marketer can be guilty of at some point … even myself. This is simply the act of counting likes as a KPI in your social media campaign. For many marketers the dream is to clearly see that like count go up so they can inconceivably brag to their peers. Unfortunately that might not mean diddly squat to your digital business. The purpose of your business in most cases is to acquire new customers, and you’ll be utilising social media for this purpose.
Instead you should be digging deep through your analytics after setting up custom goals and actually seeing these three things:
1. How much traffic social media is sending to your website
2. How many customers you’re getting from this
3. How many subscribe to your newsletters + promotional material
Sitewide Conversion Rate
Another large vanity metric is the conversion rate. Although tracking your sitewide conversion rate is better than tracking nothing at all, in the modern world it’s no excuse. If you’re just tracking your sitewide conversion rate you have absolutely NO data on which specific marketing efforts are bringing in the highest conversion rates and which are bringing in the lowest. This data is extremely powerful and can give you opportunities to backup your decisions and think strategically.
What you should be doing instead is tracking conversion by:- channel, medium and source.
This means looking at micro metrics such as observing whether Facebook is bringing in more sales than Twitter or whether the Asics running shoes are selling better than the Nike (so you then know what to offer on the homepage and social media).
Below are some metrics you should spend time analysing and dissecting for better ROI:
Traffic For The Sake Of Traffic
- Conversion by Medium
- Conversion by Source
- Conversion by Channel
Another big one which isn’t as common these days is marketers (mainly those in SEO) talking about how much traffic they get. Unfortunately as we know from the above information on conversion rates, not all traffic is created equal.
For instance you could sell designer dresses which are sponsored by Jennifer Aniston. After posting the page and doing a bit of basic SEO you could see a traffic spike. However when you did deeper it could just be people searching for ‘Jennifer Anniston News’ with absolutely no intent to purchase and bounce immediately. Obviously this is an uncommon scenario but you can encounter many of these and have plenty of traffic to your website that is useless.
Indicators you should rather focus on include monitoring ‘qualified traffic’ by looking at their engagement on your website. This will be different for different business models ranging from e-commerce to lead generation but are industry standard for good benchmarking. These include metrics such as:
- Bounce rates
- Page views
- Time on site
Above are some good guidelines to go off when understanding how you can get the highest ROI from your digital marketing efforts. If you don’t get sucked into vanity metrics then you should be focusing on the things that matter … the sanity metrics.