Growth metrics and vanity metrics: Defining what matters

“I started a social media page for my business and I have gathered over 300,000 followers in the last year. We are recording massive growth and the potentials look very promising”

The above quote is not attributed to anyone in particular but it sounds something like what we hear around in conversations among small business owners and some startups. They define their growth and progress based on metrics such as social media following, social media engagement, site visitors, number of hits achieved, and so on.

I have made a post in the past about how your social media followers do not necessarily translate into customers or revenue, hence they might not qualify as a growth metric except in an influencer brand for instance.

While all these metrics might be good indicators of market awareness or maybe acceptance of your brand, they do not necessarily mean that your revenue or balance sheet has been impacted. These are what some business experts would refer to as vanity metrics.

Why vanity metrics? Because they can be like the jewelry that adorns your business. They are beautiful additions but not necessary for businesses to thrive. Like you may well know, there are many businesses with their account books in black, and yet they are not performing so well when you weigh them based on the vanity metrics. They do not have a huge social media following. Their posts do not get the most engagement, and they may never even have achieved a single hit. Despite these, their accounts are doing just well.

On the other hand, some businesses look all beautiful when it comes to these vanity metrics. Their social media posts get all the engagement and they have hundreds of thousands of followers. They record hits every week and are always among the top 10 trends. However, when you move to their balance sheets to check the metrics that matter, you find that they may not be profitable. They may not have broken even and may still be depending on investors’ funds to keep operations going.

In essence, there are metrics and there are metrics. When it comes to understanding a business direction and whether or not it will survive, the relevant metrics are not the ones people can see. The social media following, media hits, and mentions, engagement, and likes are all beautiful, but a business can have all of these and fail if they are not profitable. You have to keep operations lean, your account books need to be balanced, your customer base should be recording steady growth and so should your revenue.