What does North Star Metric mean?
North Star Metric (NSM) should be treated as the most important measurement for the long-term success of your business and as a focus for growth. Your North Star Metric should reflect the value that your business delivers to your customers. Your entire company should experience growth when you deliver value to your customers. The more value that your customers receive, the longer they will stay loyal, and even become brand ambassadors who refer more business.
For your team, your NSM will be their guiding metric. All their work and efforts will be focused on the common goal, ensuring that your entire team is aligned to this single metric.
What is a North Star Metric?
Here are some popular North Star Metrics for popular industries.
North Star Metrics for eCommerce Businesses
- Number of Purchases Per Month
- Number of Repeat Purchases Per Month
- Number of Returning Customers Per Month
- Customer Order Value (COV)
- Customer Lifetime Value (CLV)
North Star Metrics for SAAS Companies
- Number of Free Subscribers Per Month
- Number of Paying Subscribers Per Month
- Number of Interactions by Subscribers
- Subscriber Retention Rate
Other Widely Used North Star Metrics
- Daily Active Users (DAUs)
- Monthly Active Users (MAUs)
- Average Revenue Per User (ARPU)
- Number of Actions Taken Per Customer
- Hours Engaged Per Day
How do you choose your North Star Metric?
Explore and figure out, which metric, if your team works together to increase, would deliver more value to your customers. By increasing this metric, you will get your business flywheel to spin faster – growth and revenue will follow.
Examples of North Star Metrics
| Brand | North Star Metric |
|---|---|
| Netflix | Time spent watching content per month |
| Daily active users (DAU) | |
| Spotify | Monthly active users (MAU) |
| Airbnb | Number of nights booked |
| Slack | Number of paid teams |
| Miro | Number of collaborative boards |
| Typeform | Annual Recurring Revenue (ARR) |
| Uber | Number of rides taken |
| Dropbox | Number of files stored |
| Number of professional connections | |
| Zoom | Number of meeting minutes |
| Amplitude | Weekly Learning Users (WLUs) |
Further reading:
https://mixpanel.com/blog/north-star-metric/
https://amplitude.com/blog/product-north-star-metric
https://future.a16z.com/north-star-metrics/
https://growwithward.com/north-star-metric/
https://www.blog.startupcorestrengths.com/post/how-to-find-your-north-star-metric-with-examples
https://www.linkedin.com/pulse/collection-22-saas-north-star-metrics-gokul-rangarajan/