Why Are Vanity Metrics So Seductive?

Vanity metrics are the low-hanging fruit of the data world. They're simple to track, easy to explain, and often show impressive growth. It’s much easier to brag about your million users than to explain the intricacies of your customer acquisition funnel. Vanity metrics make us feel good about ourselves and are perfect for dazzling people who don’t know better. It’s like getting a thousand likes on your Instagram post – it feels great, but does it really mean anything?

• They’re easy to measure and understand.
• They make us feel good about ourselves.
• They’re great for impressing the uninformed.

Common SaaS Vanity Metrics

A metric might be simple, ever-increasing, and perfect for a digestible headline – but that doesn’t necessarily make it the right metric.

• Total users.
• Feature usage.
• Email list size.
• Social media followers.
• Lead count.
• Website traffic.
• Time in app.
• Likes/shares on product announcements.
• Logo count.

The Dangers of Chasing Vanity Metrics

Vanity metrics are master illusionists. They’ll have you thinking everything’s peachy while Rome burns around you.

Misaligned priorities

When you’re chasing the wrong numbers, you’re basically voluntarily wearing blinders. You’ll poorly allocate valuable resources and miss opportunities.

• If you’re not focused on as-yet unresolved user pain points, you won’t address their problems, and they’ll look for someone else’s product that’ll at least try.
• You’ll poorly allocate valuable resources – you know, classics like “time” and “money” – and instead divert them to activities that don’t (actually) drive value.
• You’ll miss opportunities since you won’t discover ways to improve a metric you’re not tracking in the first place.

False sense of security

You might feel like your business is thriving, but it’s all surface-level success – the numbers you’re looking at won’t be telling the whole story.

• You might feel like your business is thriving, but it’s all surface-level success – the numbers you’re looking at won’t be telling the whole story.
• You won’t be able to see the red flags if you’re wearing rose-colored glasses.
• If you see nothing wrong, you’ll be complacent, and won’t make any effort to fix what “isn’t” broken.

Ignoring critical business issues

While you’re busy high-fiving over that new feature you launched, your burn rate is hotter than a supernova, your paying customers are screaming into the black hole you call your support queue, and your product-market fit is drifting further off course than a probe with broken thrusters.

• Your burn rate is hotter than a supernova.
• Your paying customers are screaming into the black hole you call your support queue.
• Your product-market fit is drifting further off course than a probe with broken thrusters.

Demotivating your team

When your team is pushed to focus on vanity metrics, they lose sight of what really matters. It’s demoralizing to hit arbitrary targets that don’t contribute to real business success. You know why? Because they know it’s BS, and they’ll resent you for it. Real talent wants to solve real problems, not juice artificial numbers.

• They know it’s BS, and they’ll resent you for it.
• Real talent wants to solve real problems, not juice artificial numbers.
• You’ll cultivate a culture of shortcuts and hacks instead of genuine innovation.

How to Break Free from the Vanity Metric Trap

So, how do we escape the allure of these ego-boosting distractions? Here’s your game plan:

Identify your true north star metric

Your north star metric is the one measurement that best captures the core value your product delivers to customers.

• For Spotify, it’s “stream time”
• For Airbnb, it’s “nights booked”
• For Quora, it’s “questions answered”
• For Amazon, it’s “monthly purchases per user”
• For Uber, it’s “rides booked”
• For Coinbase, it’s “transacting users”
• For Netflix, it’s “watch time”

Identify intermediate metrics that impact your north star

Your north star is the end goal, but individual teams need a bit more focus.

• The R&D teams (Product, Engineering, Design) will need to focus on addressing specific use cases.
• The customer-facing teams (Support, Success) will need to focus on keeping existing users happy.
• The GTM teams (Sales, Marketing) will need to focus on inbound and outbound lead generation and deal closure throughout the acquisition funnel.

Confirm that you’re targeting value over usage

Before you call your pyramid done, confirm that every single metric is not a self-induced chest-thumping exercise. Every metric needs to be geared toward producing value.

• R&D teams will be mostly focused on user value. Of course, there will be some teams focused on internal product/infrastructure value (e.g., DevOps targeting DORA metrics) – this is certainly still valuable to users (they can’t use a product that’s down), but they’re not related to the value prop. Also, none of this is to say that these teams should ignore business value; rather, that there will typically be some more specific user value that ends up driving said business value.
• Customer-facing teams will also be focused on user value… although, more from the perspective of how satisfied that value is making them.
• GTM teams will be focused on business value. It’s not user value, but that’s okay, it’s what they can control.

From Vanity to Sanity: Metrics That Actually Matter

Whether we’re talking about north stars, OKRs, or success metrics – be sure to focus on calculations that truly measure value for your users and progress for your product and business.

• Monthly Recurring Revenue (MRR): The lifeblood of any SaaS business. It tells you how much predictable revenue you’re generating each month.
• Customer Acquisition Cost (CAC): How much are you spending to acquire each customer?
• Customer Lifetime Value (CLV): How much revenue will a customer generate over their entire relationship with you?
• Churn rate: What percentage of customers are you losing each month?
• Customer Satisfaction (CSAT): How happy are your customers with your product or service?
• Net Revenue Retention (NRR): Are your existing customers spending more over time? How does that weigh against your churn?
• Activation rate: What percentage of new users are taking key actions that indicate they’re getting value?
• Net Promoter Score (NPS): How likely are your customers to recommend your product to others?
• Cash burn rate: How quickly are you spending money relative to your growth?

The End of the Story? Nope — the Beginning

Vanity metrics might make you look good in the mirror. But it’s just your evil twin staring back.

To build a truly successful SaaS company, you need to focus on the metrics that matter – the ones that truly drive your decisions and correlate directly with business and product health.

It’s time to break free from your vanity metrics. Identify your north star and intermediate metrics, and use the power of data to drive real, meaningful growth. Your ego might take a hit in the short term, but you’ll be more likely to find success in the long run.

Make this fairy tale your reality.