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What is a North Star Metric and How to Identify Yours

Discover the benefits and pitfalls of using North Star Metrics, learn from real-life examples, and get a six-step framework to create your own.

Here’s a great way to improve alignment between product, sales, and marketing teams.

And no, we're not talking about paid retreats or expensive “team-build exercises.”

We’re talking about the North Star Metric, a single measurement used to align the entire organization toward a common goal.

Okay, it's not the be-all and end-all of team alignment strategies (we’ll explain why), but the North Star Metric is a valuable and valid approach.

This article will explain the benefits and pitfalls of using North Star Metrics to direct product strategy, provide real-life examples, and help you create your own. 

What is a North Star Metric? 

north star metric framework

A North Star Metric is a key metric that a business focuses on as its primary measure of success.

For example, if you choose Monthly Active Users (MAU) as your North Star Metric, it would be the primary measurement that all teams use to measure success.

It is generally chosen because it represents customer value well, is deeply tied to revenue growth and can be tracked easily to demonstrate progress.

This is a fancy way of saying, “If this thing goes up, we’re doing good.”

What’s the point of using a North Star Metric? 

The idea behind the North Star Metric is to align the whole GTM (go-to-market)  team toward one goal.

When each team has a different objective, there is potential for conflict of goals. The North Star Metric is designed to prevent that.

Additionally, it’s a really good simplifier.

Today, GTM teams can monitor so many different metrics in real time that it's easy to get lost in the number and lose track of doing the actual work that moves the needle forward.

A North Star Metric helps you prevent paralysis by analysis.

Pro tip: Ignition can help you measure and track your North Star Metric in real time.

What makes a good North Star Metric? 

What makes a good North Star Metric?

So, how do you choose from the hundreds of metrics that you could possibly use as a North Star?

A good North Star Metric meets three criteria: 

1. It leads to revenue

First and foremost, your North Star Metric has to be something that ties directly to revenue.

Revenue itself can’t be a North Star Metric (it's too broad, and it doesn't meet the following criterion), but the metric you choose should be causally related to revenue.

Take MAU (monthly active users).

More users = more revenue.

For us, this is the most important aspect of the North Star Metric. We literally built Ignition to help product teams connect with revenue.

2. It represents customer value 

Secondly, a good North Star Metric should be representative of the value customers receive from your product.

This is why revenue can’t be a good North Star Metric. You can increase revenue simply by raising prices, but this doesn’t represent additional value received by customers (it's the opposite).

Take Netflix as an example.

Their North Star Metric is “total hours streamed.”

That deeply reflects customer value and leads to revenue in that more hours streamed are a result of either more customers or more engaged existing customers (leading to a lower likelihood of churn).

3. It tracks progress 

Finally, your North Star Metric needs to be seriously measurable and reflect progress toward company goals.

For instance, Asana’s North Star Metric is “weekly active paid users.”

That’s super measurable, can be tracked weekly, and represents growth in terms of customer value and revenue.

As you go through the process of choosing your North Star Metric (discussed below), make sure that any measurement you choose fits into one of the three categories above. 

The problem with North Star Metrics 

North Star Metrics are great for aligning GTM teams toward a single goal.

They are, however, kind of broad.

This can cause problems at the team and individual levels, where specific business units need a more focused and department-centric goal.

They’re also generally output metrics. That is, they represent outcomes or results.

To put it plainly, North Star Metrics are suitable for the C-Suite but impractical for actual teams to focus on.

That’s where input metrics come in.

Input metrics represent actions rather than outcomes.

Spotify North Star Metric

Input metrics ladder up into the North Star Metric but are more actionable. Progress on each input metric will contribute to progress in the North Star Metric.

For example, if your North Star Metric is MAU, sales might have an input metric related to closing new customers, while success would have one focused on activation or feature adoption.

Both of these create active users, but they are more actionable at the team level and actually relate to the day-to-day work of the team members. 

How to figure out your North Star Metric

Let’s dive into a simple six-step process to figure out what metric to use as your North Star.

1. Define what success means for your customers 

North Star Metrics should be customer-centric.

It makes sense, then, that you would begin by asking the question:

“What does success for our customers look like in the context of our product?”

Success for Netflix is related to how long customers spend watching. For DocuSign, it's how many customers use their platform to sign business documents.

Here, its fine to list out a few different ideas about customer success. We haven’t tried to decide on the final North Star Metric yet.

2. List out the factors that are relevant to success and revenue growth 

Step two is to look at all the factors relevant to business success, specifically through the lens of business growth.

Your list could include factors like:

  • New customers acquired
  • Contracts renewed
  • Successful upsells and cross-sells

Take Uber. All of these are growth signals:

  • Acquiring new drivers
  • New rider app downloads
  • First ride activated 

All of these factors are relevant to revenue growth and overall business success.

Pro tip: Our voice of the customer tools can be a great way discovering the factors that impact customer success.

Ignition Copilot AI

3. Identify the overlaps 

Now, you’re going to a little Venn diagramming exercise.

That is, you’ll take your two lists (factors that define business success and factors that define customer success) and look for the overlaps between them.

Take Uber. They might have “new rides started” on both lists, so this would be one example of an overlap that can be brought forward to the next round.

4. Match overlapping factors to KPIs

In this short step, you will choose key performance indicators (KPIs) for each of the factors on your shortlist.

For example, Netflix may identify that watching time is a customer success indicator and leads to revenue growth.

So, they would map that over to a measurable metric like “hours watched” or “new viewing sessions started.”

5. Eliminate metrics you can’t measure and control 

Next, go through that shortlist and kill all the metrics you don’t have complete control over or can’t measure and track accurately.

Consider Salesforce.

A metric like “deals closed by Salesforce users” could be a customer success factor (they’re getting value out of Salesforce and turning that into revenue from new sales) as well as a business success factor (higher customer value = lower churn).

However, Salesforce can’t directly influence how successful their customers are at selling, so it's not a metric they can control, and therefore, it would be a bad North Star Metric.

6. Choose the metric that encapsulates all crucial measurements 

At this point, your shortlist is probably looking super short.

If there is only one left on the list, you have already found your North Star Metric.

If you still have a couple to choose from, what you want to do is select the one metric that best encapsulates all other measurements within it.

For instance, on Medium.com, that metric is “total time reading.” This metric encapsulates other measurements such as “new reading sessions started” or “articles read,” and thus is the best choice for a North Star Metric.

6 North Star Metric examples

6 North Star Metric examples

Looking for a bit of inspo from the pros?

Here are six examples of North Star Metrics from some of the most successful companies in the game.

1. Intercom 

Intercom’s North Star Metric is the perfect example of a single metric that encapsulates both customer and business success:

Number of customer interactions

Here’s why:

  1. It represents customer value. Customers use Intercom to interact with their own customers. More interactions mean more value.
  2. It leads to revenue. More customer interactions mean greater value from the product, leading to lower churn and greater revenue growth.
  3. It tracks progress. This metric is super measurable and can grow with more customers, as well as improve the use of the product by existing customers.

2. Salesforce 

Salesforce has an interesting North Star Metric:

Average Records Created Per Account

They’ve chosen this because Salesforce is such a large beast of tool that it's used across the entire company.

Since marketing, sales, success, customer service, and business analysts have different goals, Salesforce needs a metric representing company progress at the highest level.

All teams are responsible for creating records, and since this is deeply representative of customer value, it's a great choice as a North Star Metric.

3. Twilio 

Twilio’s North Star Metric is right on the money:

Total Messages Sent.

Being a software platform for SMS, voice, email, chat, and WhatsApp messaging, the user experience is centered around sending messages, so it's clearly connected to customer growth.

But what makes this an effective North Star Metric is that Twilio’s pricing model is based on usage. So, the more messages customers send, the more they get billed.

As such, Twilio’s North Star Metric leads directly to revenue growth.

4. DocuSign 

DocuSign follows a similar approach to Twilio with their North Star Metric:

Number Of Documents Signed.

This is a great choice for DocuSign, particularly because they offer monthly plans and an API-based pricing scheme, where more documents signed translate directly to more revenue.

5. Slack 

Slack’s North Star Metric is a great example of how a freemium tool should focus on connecting to revenue:

Number of Paid Teams.

Why has Slack chosen “number of paid teams” instead of something more common like “Daily active users?”

Because a large chunk of Slack’s users are on free plans. 

Sure, acquiring new free plan sign-ups may be a key factor that leads to future success.

However, setting their North Star Metric as DAUs would incentivize GTM teams to attract unpaid customers. This wouldn’t necessarily drive revenue.

6. Airbnb 

Our final North Star Metric example comes from Airbnb:

Nights booked.

Airbnb has a somewhat unique business model in that they have two kinds of customers:

  1. People who host their property on the platform
  2. People who rent properties via the platform 

Airbnb needs both to function well. Nights booked are a function of success for both types of customers.

When end users book more nights, they get more value out of the app as an alternative to traditional hotels. Those who have their properties hosted on the platform get more value in the form of income.

Of course, Airbnb takes a slice of each transaction, so this North Star Metric is also intimately connected to revenue.

Finally, it's highly measurable. Each time a customer books a new stay using Airbnb, that graph moves up and to the right.

These North Star Metric examples should be used as inspiration, but don’t steal them directly. Follow the framework we covered above to find the right North Star Metric for your brand. 

Tracking improvements in your North Star Metric

The North Star Metric is a good framework for simplifying the measurement of business growth.

It's not a silver bullet, but it is a good practice for aligning sales, marketing, and success toward a single goal.

It's not the only KPI you should track. Input metrics for each team should be part of your regular reports and visible in real time on your analytics platform.

Ignition, our go-to-market platform for helping product teams connect with revenue, does just that.

Our launch impact reporting suite helps you track OKR performance, conduct retrospectives, and leverage AI to instantly surface impacted metrics.

Check out our 10-minute demo here.

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