The North Star Metric is a simple yet powerful concept that's essential for startups and growth teams. But it’s often misunderstood. Let’s break it down and clarify what it’s all about.
What Is a North Star Metric?
The term "North Star Metric" was popularized by Sean Ellis, who’s also known for coining "growth hacking" during his time at Dropbox. Here’s what makes a North Star Metric so crucial:
- Focus: It’s a single metric that everyone in the company can rally around, ensuring that the whole team is moving in the same direction.
- Clarity: It’s easy to understand, so everyone can speak the same language when discussing progress and goals.
- Customer-Centric: It reflects how customers derive value from your product, keeping the focus on what truly matters.
- Sustainability: Ideally, it represents a habit-forming process, ensuring long-term value for the customer.
- Alignment: It ties directly to your company’s vision and mission, inspiring the team to stay aligned.
- Quantitative: It’s based on numbers, not opinions, which makes it a reliable measure of progress.
- Actionable: You can take meaningful action based on how this metric changes.
- Indicator of Success: It serves as a leading indicator of your long-term business success.
Common Misconceptions
Understanding what the North Star Metric is not is just as important:
- Not Multiple Metrics: While a company might track several key metrics, the North Star Metric should be singular, accompanied by input metrics that feed into it.
- Not Business-Focused Metrics: Metrics like LTV/CAC are important, but they’re not customer-centric enough to serve as a North Star Metric.
- Not an OKR: OKRs (Objectives and Key Results) are goal-setting tools. A North Star Metric can be part of an OKR, but they’re not the same thing.
- Not a Strategy: A strategy is your game plan, while the North Star Metric measures progress within that plan. Choosing the right NSM is a strategic decision that must align with your broader strategy.
Recommended Classification
Amplitude offers a useful classification of North Star Metrics based on the "game" your company is playing:
- Attention: How much time do users spend with your product? This is key for platforms where engagement time directly correlates with value, like social media or video streaming services.
- Transaction: How many transactions do customers make? This is vital for e-commerce or booking platforms where the goal is to facilitate quick and easy purchases or bookings.
- Productivity: How effectively can users accomplish tasks? For tools like Dropbox or Canva, the focus is on helping users be more productive with their time and resources.
Identifying which of these categories your product falls into is the first step in choosing the right North Star Metric.
Get Clarity at your Startup
The North Star Metric isn’t just another buzzword—it’s a critical tool for aligning your team, focusing on what matters most, and driving sustainable growth.
By understanding and correctly implementing this concept, you can ensure that your company stays on track to achieve its long-term goals.