Defining your North Star metric

A North Star metric is the single measurement that best captures the core value your product delivers to customers. It's the number that aligns your entire company around a common goal, guiding strategic decisions and keeping everyone focused on what matters most. Choosing the right North Star is critical because it shapes your product roadmap, influences resource allocation, and ultimately determines your success.

To select an effective North Star metric, it must meet three key criteria:

1. Leading indicator of success: Your North Star should be a leading indicator of long-term business success, not a vanity metric. It should correlate with revenue, customer retention, or other critical business outcomes.

2. Reflects customer value: The metric must capture the value your customers derive from using your product. It should align with their goals and measure the core benefit they seek.

3. Actionable and measurable: Your North Star needs to be something your team can directly influence and accurately measure. It should be clear how product changes impact the metric.

Let's look at some examples of North Star metrics across different industries:

• Spotify: Time spent listening per user per month

• Airbnb: Number of nights booked

• Facebook: Daily active users

• Slack: Messages sent within organizations

• Dropbox: Total number of files uploaded

• LinkedIn: Number of job applications submitted

Notice how each metric encapsulates the core value proposition of the product and aligns with business success. For instance, Spotify's "time spent listening" reflects the value users get from the service (music enjoyment) and correlates with revenue (more listening means higher retention and subscription rates).

As you define your own North Star metric, remember that it's not set in stone. As your product and market evolve, your North Star may need to change too. The key is to always keep your metric centered on customer value and business impact.

Aligning your organization around the North Star

Aligning an organization around a North Star metric requires clear communication and cascading goals. Start by explaining the importance of the North Star metric to all stakeholders. Emphasize how it reflects customer value, leads to revenue, and measures progress.

To cascade the North Star metric, break it down into team-specific goals and KPIs. Each team's goals should directly contribute to improving the North Star metric. For example, a product team might focus on increasing feature adoption that drives the metric.

Getting buy-in across departments can be challenging, but focusing on shared success is key. Demonstrate how the North Star metric benefits each team, from product to sales to customer success. Use data to show how improving the metric leads to better outcomes for everyone.

Regularly review and communicate progress on the North Star metric and team goals. Celebrate successes and identify areas for improvement together. By keeping the North Star metric front and center, teams stay aligned and motivated.

Remember, a North Star metric is a long-term guide, not a short-term target. It should evolve as the company grows and priorities shift. Continuously evaluate if the metric still reflects customer value and leads to revenue.

Adopting a North Star metric requires a culture of alignment and shared ownership. Leaders must champion the metric and ensure everyone understands their role in driving it. With clear communication, cascading goals, and a focus on shared success, organizations can rally around a North Star metric and achieve sustainable growth.

Measuring and tracking your North Star metric

Setting up the right data infrastructure is crucial for tracking your north star metric. You'll need a reliable analytics platform that can capture user-level data across all touchpoints. This data should be easily accessible to your team for analysis and reporting.

When it comes to visualizing your north star metric, simplicity is key. Create a dashboard that clearly displays your metric's current value and historical trends. Use annotations to highlight key events or initiatives that may have impacted the metric.

While your north star metric should be the primary focus, it's important to balance it with other key metrics and OKRs. These supporting metrics provide context and help identify areas for improvement. For example, if your north star metric is "weekly active users," you may also track metrics like "user retention" and "feature adoption."

Regularly review your north star metric with your team and stakeholders. Use these meetings to discuss progress, identify challenges, and brainstorm strategies for improvement. Celebrate milestones and recognize the efforts of team members who have contributed to the metric's success.

It's also essential to periodically reassess your north star metric to ensure it remains relevant and aligned with your company's goals. As your product and market evolve, your north star metric may need to be adjusted or replaced. Don't be afraid to make changes when necessary—a well-chosen north star metric should adapt with your business.

Evolving your North Star over time

As your product and business mature, your North Star metric may need to change. Signs that it's time to re-evaluate include:

• Your current metric no longer reflects your core value proposition

• You've achieved your initial growth goals and need a new target

• Your product strategy has shifted significantly

To update your North Star, follow a similar process as when you first defined it:

1. Reassess what value you provide customers and how that ties to business outcomes

2. Identify the key actions that deliver that value

3. Select a metric that best captures those actions and aligns with your current strategy

Netflix provides a great example of evolving their North Star metric. Early on, they focused on growing their DVD subscriber base.

As streaming became their core business, they shifted to optimizing total viewing hours. This reflected their new emphasis on engagement and content quality over pure acquisition.

More recently, Netflix added paid net additions alongside viewing hours as a key metric. This balanced their focus between engagement and financial health as they matured.

Uber is another company that successfully pivoted their North Star. They initially aimed to maximize completed rides, which made sense for establishing their marketplace.

However, they later realized that weekly active users better captured the health of both supply and demand. This shift helped them optimize more holistically for liquidity and convenience.

The key is to regularly re-evaluate your North Star as your strategy and circumstances change. By keeping it aligned with your evolving product vision and business priorities, you'll ensure it remains an effective guide for your team.

Leveraging your North Star to drive growth

Your North Star metric should be the foundation of your product strategy. Use it to prioritize features, improvements, and experiments that will have the greatest impact. Regularly review your product roadmap to ensure alignment with your North Star.

To move the needle on your North Star, launch targeted experiments and initiatives. Start with a hypothesis for how a change will improve the metric. Then design a test, set goals, and measure the results.

Improving your North Star metric should translate to better business outcomes. Analyze the relationship between your North Star and key results like revenue and retention. Use this data to make a strong case for continued investment in the product.

Here are some tactical ways to leverage your North Star metric:

• Use your North Star to evaluate feature requests and determine their priority

• Set team and individual goals that directly contribute to improving the North Star

• Report on North Star progress to leadership to demonstrate the product's impact

• Analyze user segments to identify opportunities to boost the North Star metric

• Sunset features or flows that don't materially impact the North Star

When running experiments to improve your North Star metric:

• Focus on high-leverage areas that significantly affect the North Star

• Set clear, measurable target lifts in your North Star metric

• Have a plan to roll out winning experiments to all users

• Learn from failed experiments to inform future tests and roadmap decisions

Improving your North Star should be the ultimate goal of your experiments. But you also need to connect your North Star to business metrics:

• Instrument your North Star to understand its impact on revenue

• Analyze cohorts to see how the North Star affects retention and LTV

• Model out the revenue impact of lifting your North Star metric

• Share these insights with leadership to justify further product investment

By orienting your product strategy and experiments around your North Star metric, you can drive meaningful growth. The key is to stay laser-focused on improving that metric and tying it to business outcomes. With the right North Star guiding the way, you'll be able to measurably boost your product's success.