The world of “digital” business is awash with vanity metrics and incorrect assumptions of success. Part of the blame lies on the social media platforms themselves, who for the longest time peddled the idea that engagement translated to online success before repositioning as media companies.
Remember when Facebook made everyone pivot to video? Well, they recently disclosed that they had potentially over reported views by as much as 900x. Many marketers breathed a collective sigh of relief and said “That’s why our content marketing wasn’t working”. Not so fast though, there’s potentially another reason. As marketers and business people, we are more often than not measuring the wrong things or measuring the right things the wrong way.
I have always been a firm believer in first principles, so let’s go back to basics before we go any further.
Firstly, let’s establish that digital/online business is just business conducted on online channels. Meaning the basic principles of business still apply. Technology or digital just serves as a force, efficiency or scale multiplier for a business model. Very rarely will the technology itself be the business. And even in such cases, you will still need to carry out less “sexy” business functions likes sales, customer service and payroll.
Second: Issues in any system (or for our purposes any business), compound as the system grows larger. Basically, complexity amplifies problems that are hidden.
Third principle, almost everything in existence bearing a similar nature can be reduced to comparable units. Meaning the process below would work very similarly across various industries because almost all business are fundamentally similar at their core.
Fourth Principle Data is a symptom not a cure, it is only as useful as the way it was collected and the interpretation given to it. You can have all the data in the world, but context matters a great deal.
Now let’s do a little thought exercise to highlight the error of vanity metrics.
If you were to post a video of a cat dancing on your Facebook page and you get a ton of views the , do those views actually translate to business success?
What about if your page has 70,000 comments every day? Does that mean that your business success is through the roof?
The answer to both is more often than not a resounding No.
In the first scenario, the views are high because the dancing cat is interesting, not because there is actually in interest in your business. In the other scenario, 69,999 of those comments could be people cursing out your company for a horrible product or service. That is definitely not a sign of business success .
So how do you track the right things and avoid being trapped in the cycle of vanity metrics that mean absolutely nothing? it requires an in depth understanding of your business and 3 simple steps.
To begin with, find what you want to get improve on . Call this your Goal and make sure it’s directly linked to a business objective and not just a social media objective like comments or shares.
For instance, if you are makeup artist, you might want to increase service quality.
Next find out that one thing about your business can help you to track improvements or changes in your Goal. Call this your Signal. It is important for this to be something that can be quantified and which is not too easily . susceptible to dirty inputs.
Our makeup artist, would most likely choose referrals as the way to track service quality.
Lastly find the best way to monitor your signal strength and call this your Metric. Obviously you’d prefer to look at ratios or percentages. But beware! Ratios and percentage do not have the same import as gross numbers. Ratios are great for comparatives but often obscure issues in quantity or scale, whereas whole numbers are typically better as hard targets.
Our makeup artist could decide to look at number of referrals per week or percentage of customers who were served in the last week who recommended the business.
The makeup Artist would then look at what the optimal metric is and aim to maintain that metric as her baseline KPI.
The 3 steps in a nutshell: Goal > Signal > Metric
It is interesting to note, that from an empirical standpoint, every business need only track 2-3 well selected goals to see a shift in revenue and success. This is attributed to the concept of business as a synergistic system. Therefor to improve one part one must work on improving the other elements of the system.
My advice? Make the goals you select align to your business’s mission or vision and track them obsessively.
It’s time for the clever reference to Eagles and Peacocks although I think it’s plenty obvious by this point.
The bedazzling plumage of a Peacock prevents it from soaring in the sky and yet it is so enthralled by its own image that it fancies itself the mightiest of birds.
Eagle or Peacock, which are you?
Ps: Thanks for reading, please drop a comment and share.
This is very useful, thanks for sharing.