When people get confused about “BS metrics”
I wrote a post a few weeks ago about needing to find the only metric that matters for your product and company.
I wrote a post a few weeks ago about needing to find the only metric that matters for your product and company. Since then there have been a number of posts about bullshit metrics focused on avoiding the vapid bluster about downloads and page views that don’t represent actual usage. The good news is I think everyone gets that when you just hear about a large number of downloads, page views, or registered users, there are several important questions to ask beyond that to figure out whether something really gets used.
Yesterday I saw something for the first time - a major company announced a milestone (LinkedIn announced 200M registered users) and got called out as a BS metric. I tweeted this news positively, relating it to Twitter’s recent announcement of 200M active users and had a number of interesting Twitter conversations around calling LinkedIn’s numbers BS metrics. As I have thought about it more, I want to call BS on calling total registered users a BS metric for LinkedIn.
What is important about a key metric is that it is uniquely tied to the business value of the company and indicates there is some set of growing adoption and usage of that company’s products.
For a service like Twitter, the business is based primarily around advertising. This means that what matters is usage and viewership - i.e. you need enough people to see the ads to have a business selling ads. For a business like this, if you report on total users without talking about active users and frequency of use, then you have no idea who is really using the product and how many ads they can really deliver. This applies to pretty much any company where the business is based on active usage and consumption.
But not every business is based around active usage and consumption from the entire base. For example, for a bank’s safe deposit business, active usage wouldn’t matter at all. It doesn’t matter how many times people open or visit their boxes as long as they pay the annual fee to keep the box and key in their possession. And it wouldn’t be a BS metric to talk about total boxes paid vs open rate.
For LinkedIn, I believe that what matters for the size of their business is exactly the number of registered users. LinkedIn’s primary business is hiring solutions which is about selling tools to recruiters and hirers to identify and contact people who are signed up for LinkedIn about potential jobs. The only thing that matters is how many people are available to be contacted and are likely enough to respond. So having 200M users registered and available to be contacted is a huge milestone and not the same bullshit metric that we would see from using this for other companies. Now LinkedIn is obviously building more features to create more daily and frequent engagement, and for those businesses, the number of active users daily and monthly matter more (such as reading the LinkedIn Influencer content). But this is different and we shouldn’t compare apples to oranges.
Anyway - my main point is it is great we are entering a period where we care about metrics and start asking the right questions. But there are no bullshit metrics as long as they represent the business in the right way. And any metrics that don’t represent the business are automatically BS.