Quick Answer
For search, voice, and "just tell me what to do".
Vanity metrics feel good but don't inform decisions: total downloads, social followers, gross revenue without costs. Reality metrics drive action: profit margin, retention rate, cash flow timing. AI helps identify which numbers actually predict business outcomes.
Key Takeaways:
- Vanity metrics inflate in every successful and failing business
- Reality metrics diverge between success and failure
- AI can test which metrics actually correlate with outcomes
- The metric that scares you is probably the one that matters
Playbook
List your most-reported metrics
For each, find examples of failed businesses with good numbers
Identify metrics that are high only in successful businesses
Use AI to correlate your metrics with cash flow outcomes
Shift attention to metrics with proven predictive power
Stop celebrating metrics that don't predict success
Report reality metrics even when they look bad
Common Pitfalls
- Choosing metrics that make fundraising decks look good
- Celebrating vanity metrics publicly then panicking privately
- Not testing whether tracked metrics actually predict outcomes
- Changing metrics to hide declining reality
Metrics to Track
Metric-to-outcome correlation (does this predict cash flow?)
Actionability score (how often does this change decisions?)
Leading vs lagging classification
Manipulation risk (how easy to game this metric?)
FAQ
What are common vanity metrics for small businesses?
Total revenue (without profit), website traffic (without conversions), social media followers (without engagement that converts), app downloads (without active users), and total customers (without retention).
How do I know if a metric is vanity or reality?
Reality metrics can go down and still be useful. They connect directly to cash flow. They would be different in a failing vs thriving business. Vanity metrics only go up and feel good without informing decisions.
Should I stop tracking vanity metrics entirely?
Track them if stakeholders require them, but don't manage to them. Your private dashboard should be reality metrics only. Public reporting can include vanity metrics with reality context.
Related Reading
Next: browse the hub or explore AI Operations.