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A college using FutureFund—my fundraising platform for K-12 school groups—recently raised $9,500 for their softball team during a hit-a-thon campaign. This money will have a positive impact on these students, but it’s not something we might use to advertise the value of our platform.
Without context, that $9,500 doesn’t provide any useful information to potential users. It could appear loosely positive, but it doesn’t say anything about what they should expect from using the platform. In other words, it’s a vanity metric.
Here’s a higher strategy to look at the data: $9,500 raised by a team of 30 students breaks right down to about $353 per student. Imagine a school group trying to boost money for a 50-player football team—or a charity run with a whole lot of participants. That per-student metric would mean a lot more to them than some arbitrary lump sum.
Startups often make this mistake. They focus on numbers that do not really matter, while ignoring the ones that do.
Here’s how you may fix it.
This Is the Most Important Vanity Metric Startups Follow (and Why It’s Not Helpful)
The biggest vanity metric that almost all startups chase is their growth percentage. You see all of it the time—corporations tout that they’ve grown by incredible amounts—like 500% in the past yr. But here’s the thing:
If you begin with $1, go to $5, and call it 500% growth, that does not imply anything. It’s still just $5. A lemonade stand can grow 500% in a yr, but that does not make it a successful business or a profitable opportunity for investors.
That does not imply that growth percentage never matters. If you are an established company attempting to grow by 20% and you grow by 22%, that may still be necessary. But for most startups, that is the biggest vanity metric.
How to Recognize Vanity Metrics at a Glance
Here’s my rule when people ask me what a vanity metric is: Any metric you place on your website or in a press release is probably a vanity metric. Any metric with a nice, round number. Things with plenty of commas. Things that look good.
They aren’t at all times useless, but you mustn’t chase them. They can look good on your site and make people feel comfortable doing business with you, and they are widely useful for your marketing. You just shouldn’t change your small business operations to extend them.
Why Your Mission Should Always Come First
I never had a goal of raising $140 million for FutureFund. When we hit $130 million, was that fun? Of course. Is that a substitute for more revenue? Sure. But I knew that couldn’t be our mission.
Our mission is to complement the lives of scholars around the world. I might relatively measure how many students have been impacted by our platform and how many have the opportunity to experience things they wouldn’t have been in a position to experience without our platform.
These metrics actually tell us how well we’re executing on our mission. They’re a reflection of whether we’re fulfilling our purpose, not only how much money we’re making. Being purpose-driven helps us set larger goals and have a more meaningful impact on the world. It helps us think larger and do higher.
Vanity Metrics vs. Growth Levers
Then we have growth levers—the numbers we use to enhance our business. These are some of the best metrics to research, although they’re rarely the most interesting topics to speak about. They’re not as exciting, but they’re a lot more useful.
The levers of growth are different depending on your mission or your immediate goals. For example, if you are acquiring people, you desire to look at customer acquisition costs, churn rates, etc. Because our goal is Future Fund is about helping schools. We check how many dollars are raised per student in each school that works with us.
That brings us back to the softball team. Yes, they raised $9,500 — but that $353 per player was the metric we focused on. It shows other schools what they can expect from working with us, and it reflects how well people are using the platform, which might help with future updates and recent features. It’s not only higher for promoting; it’s also a significant growth lever.
Growth percentages are too relative to mean much to most startups, and revenues are not tied to your mission, which ultimately keeps customers coming back. When you place aside these vanity metrics and focus on the growth levers that make it easier to bring more value to the market, you set yourself up for more consistent and sustainable growth.