Peter Drucker’s famous quote “If you can’t measure it, you can’t improve it” is always a great place to start. But by itself, it can lead to a false perspective on your results. Drucker’s second famous quote is “management is doing things right, leadership is doing the right things.” When it comes to marketing vanity metrics equate to doing things right, but KPI’s measure doing the right things.
What do we mean by Vanity Metrics?
Vanity metrics are valid marketing measurements, but they don’t have a great deal of correlation with your business results. They will often simply show that your vendors or marketing teams are growing or creating positive results. A few examples may help shed some light on this. Lead generation growth is often listed as a KPI. Unless you can show a strong correlation of leads-to-deal or revenue growth, it’s more likely a vanity metric. I’ve seen many ways to buy or grow mass leads that aren’t qualified and cost your business dollars and time wading through that information. Even if your marketing department or a vendor says leads grew by 60%, it is not often a solid indicator.
Key Performance Indicators
KPI’s are measurements that help to determine if your marketing is leading to positive results in your business. The number one KPI for marketing should always be revenue growth. We can help you understand if other metrics and touchpoints are leading to business by attribution models. For example, if you sell via e-commerce, only looking at visitors is likely eye-candy, but time on site is more likely your KPI. Similarly, “opportunities created” is often a more valuable KPI than leads, which can be bought or influenced by contests.
A critical comparison
Another vanity metric is cost-per-lead, this can be “gamed” by offering more leads for a fixed cost. The challenge is the quality and real cost of working through those leads. A real KPI is cost-per-opportunity or cost-per-deal, these more closely align with your effectiveness. Would you rather have a $5 cost per lead or an $8 cost per lead?
In this case, the lower cost-per-lead is driven by unqualified leads that lower your per-unit cost but will take time and effort to evaluate. A higher-quality source of leads may cost more per unit but develop more deals and the cost per added revenue dollar is significantly less.
Again, it’s a great start to make sure you are measuring your marketing programs. To be more effective and ensure that you want to invest in marketing, be sure to align your metrics with how they impact your business results. These critical KPIs will help you determine your progress and whether you should invest more, reduce spending or, try to test new tactics and learn. For more information reach out to us at www.randinc.cc or email email@example.com.