The Benefits of Being a 'Regular' and the Dangers of Vanity Metrics


Hatched by Glasp

Sep 07, 2023

4 min read


The Benefits of Being a 'Regular' and the Dangers of Vanity Metrics

In today's fast-paced world, consumers value their relationships with businesses more than ever before. A recent study revealed that it takes an average of eight visits for a consumer to consider themselves a regular at a business. This highlights the importance of building trust and familiarity with customers. But what exactly are the benefits of being a regular? And why should businesses be cautious of vanity metrics?

One of the top benefits of being a regular at a business is the trust that develops between the customer and the employees. A whopping 61 percent of respondents in the study reported that they trust the people at the business and their capabilities. This trust is built over time through repeated interactions and positive experiences. When customers trust the employees, they are more likely to continue patronizing the business and recommending it to others.

Another benefit of being a regular is that the employees know the customer's preferences. This was cited by 57 percent of respondents. Whether it's a favorite drink at a coffee shop or a preferred table at a restaurant, knowing that the employees understand and remember these preferences creates a personalized experience for the customer. It makes them feel valued and appreciated, leading to increased loyalty.

Similarly, regular customers appreciate knowing what to expect from the services provided by a business. Consistency is key in building a loyal customer base. When customers know that they will consistently receive high-quality products or services, they are more likely to become regulars. This familiarity and predictability create a sense of comfort and satisfaction.

While being a regular at a business has its benefits, it's important for businesses to be cautious of vanity metrics. Vanity metrics are numbers that may make a business look good on the surface but have no material impact on its ability to make informed decisions and drive durable revenue growth. These metrics are superficial and fail to provide meaningful insights.

A good metric, on the other hand, is one that is easily understandable and trackable by everyone in the business. It allows for comparisons over time to identify trends. Additionally, a good metric can be turned into a ratio or rate to provide even more valuable insights. Most importantly, a good metric is one that drives behavior and informs decision-making.

An example of a vanity metric is the number of daily and monthly active users. While these numbers may seem impressive, they only matter if these users are actively engaging with the core product and adding value. Similarly, funding raised may give a business the opportunity to run more experiments, but it doesn't guarantee successful execution. Money can buy time, but it can't buy success.

Metrics that lack segmentation are also of limited use. It is essential to understand how different segments of a business contribute to its overall success. Knowing the customer acquisition cost and the time it takes to recoup it across various segments provides valuable insights for decision-making.

Customer lifetime value is another metric that can be misleading if not properly analyzed. Customers need an opportunity to churn before their value can be accurately determined. Relying on assumptions without a track record of at least three years can lead to flawed conclusions.

Vanity metrics can also be found in the form of net promoter scores (NPS) and adjusted EBITDA. NPS can be easily manipulated, and businesses may use biased reviews to impute a high score. Adjusted EBITDA may hide underlying issues if the assumptions behind it are not thoroughly examined.

When it comes to revenue, like-for-like comparisons must consider factors such as inflation and foreign exchange impacts. Focusing solely on revenue without analyzing the levers of price and volume can mask significant problems.

In conclusion, being a regular at a business has numerous benefits, including trust, personalized service, and consistency. However, businesses must be cautious of vanity metrics that may provide a false sense of success. Instead, they should focus on metrics that are easily understandable, comparative, behavior-changing, and actionable. Here are three actionable pieces of advice:

  • 1. Build trust with your customers by consistently delivering high-quality products or services. This will help create a loyal customer base.
  • 2. Collect and analyze data segmented by different customer segments to gain valuable insights into your business. This will enable you to make informed decisions tailored to each segment's needs.
  • 3. Focus on metrics that drive behavior and inform decision-making. Avoid vanity metrics that provide superficial insights and instead prioritize metrics that are understandable, comparative, and actionable.

By prioritizing meaningful metrics and nurturing relationships with customers, businesses can thrive in an increasingly competitive market.

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