Vanity Metrics are Creeping into Every Industry

September 22, 2017 Ricky Thomas

Vanity Metrics Skewing Project Data


From start ups to FTSE 100 companies vanity metrics inevitably creep their way into the standard metrics of the company. They tend to occur early in projects when there are not enough outputs to determine the progress, so inputs begin to be evaluated. This skews the performance reports of the project as there is still no evidence that current activities are producing the desired outcomes.

Hotel Industry Metrics

In the hotel industry, metrics are important to maintain occupancy rates at optimum levels. You can often glean useful data from vanity metrics if you break them down into more concrete details. In one case, did double bedrooms increase or decrease faster than single bedrooms? Did you get more clients from specific states or countries? Are there increased numbers of younger customers in the last year? Are different age ranges staying longer than they have historically?

By asking these questions, you can begin to develop metrics that matter such as:

  • Revenue per available room- This is a quick look at the average daily room revenue for rooms available in the complex. It can vary widely and is useful as a quick look at location performance.

  • Market penetration index- also known as occupancy penetration index- This metric tells you how your hotel’s occupancy stacks up to a specific data set such as competition in your market.

  • Marketing cost per booking- This gives you actual results compared to the cost of your sales and marketing channels, measuring your return on investment.

  • Direct revenue ratio- This metric tells you the percentage of revenue coming in through your own booking properties versus those of third-party providers. While travel agents and third-party sites are useful, they are expensive and bring down your profit.

SaaS Metrics

The world of Software as a Service providers is chock-full of vanity metrics. You'll often hear phrases such as, "We increased sign-ups 200 percent!" or "Our website traffic is up 50 percent!" These types of metrics are not useful unless you can provide greater detail and context. It's great to have more sign-ups to your site, but how many are actually laying down hard cash for your service?

Similar vanity metrics within SaaS include:

  • CTR, or click-through ratio - It's great that a number of people clicked from your home page to a newsletter sign-up form, for example, but how many ended up adding dollars to your bottom line?

  • Overall traffic- In the world of SaaS products it's more important to figure out your churn, conversions, monthly rate of return (MRR) and more. Large numbers of people visiting your site is good, but if they are not signing up for a demo, it does no good to improve traffic numbers.

  • Email subscribers- Email is still important in marketing for a number of SaaS providers because it allows them to build their list of prospects. Instead of a large subscription list and little impact, concentrate on creating content that engages your target audience, builds their trust and helps them solve problems.

Ad Tech Metrics

Overall ad spending topped out at $60 billion in 2015, up over 20 percent from the previous year, though desktop advertising was only up 5 percent. In contrast, mobile increased by over 66 percent in the same time period. Unfortunately, statistical research from Page Fair indicates that ad blockage is up considerably. Now more than 200 million people block ads on the desktop, and over 400 million do the same on their mobile devices.

Amidst all this tumult, ad tech companies are increasingly examining which metrics are vanity-based and which have actionable characteristics.

Vanity metrics such as "viewability" are easy to fake or massage, and don't provide any actionable insight. Recent data shows that fraud in the form of bot traffic, malicious advertising and stolen content is costing American marketers more than $8 billion every year. In traditional media, advertising buys are often placed using the metric of Cost Per Thousand (CPT) impressions, which can be considered a vanity metric as it is too simplified and you can’t see if you are engaging with your target audience.

One metric that is important to advertisers and marketers is engagement. It's an important metric, but it is difficult to measure. In advertising, it is known as "time-spent." Time spent is getting more attention because it may reduce inventory and clutter that degrades the viewer experience. It signals a new era in how advertisers think about effectiveness, and puts more emphasis on quality than sheer efficiency. Two metrics are used to measure time-spent: Cost Per Hour (CPH) or Cost Per Second (CPS).

Travel Industry Metrics

Although travelers are always looking to make the best deal they can on airfare, hotels and tours, at the end of the day travel is an emotional investment. Active travelers love indicating their favorite countries, cities, beaches, restaurants and vacation destinations through social media. Yet none of these can really help you if you are trying to determine the KPIs for your travel business.

Instead, you should be looking at metrics such as:

  • Turnover- This metric shows you revenue made on specific dates, specifically when customers actually book trips.

  • Secured bookings- Compare your booking dates with the dates the travel is paid for. This helps you determine future income, and is useful to track against your cash flow numbers.

  • Cash flow- Cash flow is the lifeblood of the travel and tourism industry. As many businesses are seasonal, cash flow can vary to a high degree. Drill down deep in your cash flow statistics to find which providers are bringing you the most revenue.

  • Inventory booked- You can fine-tune your operation to accommodate peak trips and take advantage of new opportunities you might not have been aware of otherwise.

Facebook likes, Instagram followers and fans on Twitter are cool things to have because they indicate the excitement people feel for travel destinations and fun places to go. But they are just icing on the cake. The heart of the business is found in the effective KPIs that will help your company level out revenue during the year and grow in the months to come.

Taking Action

As you can see, the action-oriented and vanity metrics in each industry can vary. But the core of actionable metrics remains the same: Does this measurement tell me if I am losing or gaining revenue, acquiring or losing customers, and what is the primary benefit I offer my clients. To determine this, try focusing on key metrics that will give you a good cross-sectional look at the business.


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