Don’t get lost in vanity metrics

Vanity metrics are numbers that make you feel and look good – but that do not deliver revenue.

Vanity metrics can be clicks, Facebook likes, visits to your web site or users of your service.

At Sonetel we used to measure the success of our own Google Adwords advertising by the amount of people that signed up for our service. We thought we were doing great.

…until we changed our metrics to instead measure the success of the ads in terms of how many new paying customers they actually delivered.

We found that 95% of all clicks that we paid for were wasted.
We also found that 30% of all clicks came from China, and that almost none of them converted into paying customers.

We basically paid for 40 million clicks per month that didn’t give us any new customers.

This insight allowed us to reduce our marketing spending to a fraction, and still get the same amount of new customers per day.

Lesson learned.

From one angle, it is fascinating to see how easy it is to get millions of people to click on ads promoting a service they apparently don’t need. There are obviously a lot of people out there with a lot of time to waste.

So here is a piece of advice:

Only spend marketing money on activities that allow you to track exactly what revenue they deliver.

Good luck with your metrics.