Modern marketing generates an overwhelming amount of data. Dashboards overflow with impressions, clicks, followers, open rates, engagement scores, and dozens of other metrics. But here's the uncomfortable truth: most of these numbers don't matter.
The metrics that fill your reports often have little connection to business outcomes. They feel good to track—who doesn't want to see follower counts rise?—but they don't help you make better decisions or drive real growth. It's time to cut through the noise.
The Vanity Metrics Trap
Vanity metrics are numbers that look impressive but don't connect to business value. Common examples:
- Impressions: How many times something was shown, regardless of engagement.
- Follower counts: A big number that may or may not translate to reach or revenue.
- Page views: Traffic without context about quality or intent.
- Email list size: Subscribers who may never open, click, or buy.
These metrics share a common problem: they measure activity, not outcomes. They tell you what happened, but not whether it mattered.
"The most dangerous metrics are the ones that make you feel good about bad performance. If you're celebrating vanity metrics while revenue declines, you're missing the point."
Metrics That Actually Matter
The metrics worth tracking have these characteristics:
- They connect directly to revenue or profitability
- They can be acted upon—when they move, you know what to do
- They're leading indicators of future performance
- They help you allocate resources more effectively
Here are the metrics we focus on with clients:
Customer Acquisition Cost (CAC)
What it costs to acquire a new customer, fully loaded. This is the foundation of sustainable growth. If your CAC exceeds what a customer is worth, you're losing money with every sale.
How to use it: Track CAC by channel, campaign, and customer segment. Identify where you're acquiring customers efficiently and where you're overspending.
Customer Lifetime Value (LTV)
The total revenue a customer generates over their relationship with you. This determines how much you can afford to spend on acquisition and where to focus retention efforts.
How to use it: Calculate LTV by acquisition source. You might find that organic search customers are worth 3x more than paid social customers—information that should inform your budget allocation.
LTV:CAC Ratio
The relationship between what customers are worth and what they cost. Generally, you want this ratio to be at least 3:1. Below that, you're likely not profitable. Above 5:1, you're probably underinvesting in growth.
How to use it: Monitor by channel and segment. A low ratio signals efficiency problems; a high ratio signals growth opportunities.
Contribution Margin
Revenue minus variable costs, expressed as a percentage. This tells you how much money actually flows to the bottom line from each sale.
How to use it: Use contribution margin to prioritize which products, channels, or customers to focus on. High revenue with low contribution margin might be worse than moderate revenue with high margin.
Conversion Rate by Stage
The percentage of people who move from one stage of your funnel to the next. This shows you where you're losing potential customers and where to focus optimization efforts.
How to use it: Build a funnel map with conversion rates at each stage. The biggest drop-offs are often your biggest opportunities.
Revenue per Visitor (RPV)
Total revenue divided by total visitors. This combines traffic quality and conversion efficiency into a single number.
How to use it: Track RPV by traffic source. A source with lower traffic but higher RPV might deserve more investment than a high-traffic, low-RPV source.
Payback Period
How long it takes to recoup customer acquisition cost. Even with a healthy LTV:CAC ratio, a long payback period can create cash flow problems.
How to use it: If payback is longer than you'd like, focus on strategies that accelerate early revenue—upsells, higher initial purchases, or faster time to first purchase.
Building a Metrics Framework
Don't try to track everything. Build a focused framework:
1. Choose Your North Star
Pick one metric that best represents your business health. For most businesses, this is either revenue growth or profit growth. Everything else should ladder up to this.
2. Identify Leading Indicators
Your North Star is a lagging indicator—it tells you how you did, not how you're doing. Identify 2-3 leading indicators that predict your North Star metric.
3. Set Diagnostic Metrics
When leading indicators move, you need to know why. Diagnostic metrics help you investigate. These can be more numerous but should only be consulted when diagnosing specific issues.
4. Kill the Rest
Every metric you track takes attention away from metrics that matter. Be ruthless about eliminating dashboards, reports, and metrics that don't inform decisions.
Common Mistakes
- Tracking too many metrics: When everything is measured, nothing is prioritized.
- Measuring inputs instead of outcomes: "We published 10 blog posts" is an input. "Blog content generated 50 leads" is an outcome.
- Comparing incomparable metrics: A 3% conversion rate means nothing without context about traffic quality and intent.
- Optimizing for metrics instead of business: You can improve almost any metric in ways that hurt your business.
Ready to Focus on What Matters?
If your reporting feels cluttered and confusing, or if you're not sure which metrics should drive your decisions, let's talk. We'll help you build a metrics framework that focuses on what actually matters for your business.