I found Ivory Madison’s article on Why Your Social Media Metrics Are a Waste of Time to be an interesting read. Here’s a little snippet:
If you think pageviews, unique visitors, registered members, conversion rates, email-newsletter open rates, number of Twitter followers, or Facebook likes are important by themselves, you probably have no idea what you’re doing. Those metrics are the most common false idols of analytics. They’re what Eric Ries, author of The Lean Startup, calls “vanity metrics.”
Vanity metrics look good but fail the “So what?” test. Before you tell your CEO you have a million Twitter followers, ask yourself, “So what?” A better metric is how many products you sell as a result of tweeting a link to your purchase path.
Here are four of the most important metrics you can follow — notice how little they have to do with popular social-media metrics:
- Relevant revenue. Note the word “relevant,” which refers to recurring sales in your core business. Don’t count revenue from one-time or stagnant sources.
- Sales volume. This can be a number like units sold or active subscriptions, something that shows whether or not enough people want to buy what you’re selling.
- Customer retention. Metrics like “new customers” can hide the fact that although you may attract 1,000 new users a month, you’re losing 900, which means you’re not going to scale.
- Relevant growth. Too often, companies compound the stupidity of their choice of metrics by creating a metric tracking the growth of vanity metrics. You should be looking for a traceable pattern in which the actions of your existing customers create new customers. That’s what Ries calls an “engine of growth.”