North Star Metric

What is a North Star metric?

A North Star metric is the primary and most important measurement used by a company to track the success of their product and overall business. This North Star metric should guide your team’s efforts and decisions, helping everyone focus on what truly matters for growth and company success.

Your company’s North Star metric is the shining light that helps lead your efforts to get your product to where you want it to be. Just like for the three wise men, looking towards your North Star can stop you from getting lost in a desert wasteland of vanity metrics and misleading data all while aligning your whole team to a single common goal. 

Whatever this metric is, it’ll be a measurement that most clearly shows you how successful the business and product are. It’s a single metric that demonstrates how well your users recognize the core value proposition of your product and how that perception of value converts into revenue. 

Your North Star isn’t any old metric, it’s one that directly ties customer value to business growth. 

For a product team focused on product-led growth business model the North Star is a key measurement of long-term success. It connects the dots between the problems you’re solving for your customers and the revenue generated from doing so, helping you create a better product strategy. If each star in the night sky is a metric or KPI that you can measure, your North Star should be the one that shines the brightest 🌟.

Who invented the North Star metric? 

Growth hacking expert and founder of Growth Hackers, Sean Ellis, is credited for popularizing the North Star metric, developing it to help companies and business leaders scale quickly by honing in on a single, ultra-important metric. 

Essentially, he put the blinkers on to stop these companies from focusing on unnecessary metrics visible in their peripheral vision. Instead, the North Star metric was designed to help zero in on a single measurement that represented the core value being delivered to active users. This helped clients like Dropbox and Eventbrite win the ‘Kentucky Derby’ of product growth. 

The reasoning behind having a North Star metric makes a lot of sense. Businesses can often sink in a sea of data, tracking multiple metrics without a clear direction. By finding the one KPI that best demonstrates successful growth your teams can become more aligned around achieving that growth. This metric is the sonar that helps keep you on course through your voyage and anchors your growth strategies.

What’s the difference between a North Star Metric and a KPI?

Let’s clear up some often confused definitions, and really ram home the core differences that make a North Star metric unique. Both North Star metrics and KPIs can measure company success, but they serve different purposes.

Essentially a North Star metric is a KPI – a key performance indicator. But it is THE key performance indicator. The one KPI to rule them all. In that sense, your North Star metric is the leader of your KPIs, promoted above the rest as the most important metric in the organization.

The remaining KPIs are then there to support the efforts that will lead to the achievement of the overarching North Star metric. They are the backup singers behind the headlining megastar. 

• North Star metric: A single, overarching metric that demonstrates the commercial success of the product. It guides the entire company, measuring the relationship between solving customer needs and business success. 
  
• Key performance indicators (KPIs): Specific metrics that track the performance of individual activities or departments. They are often more granular, less overarching in their scope, and successful improvement of an individual KPI alone won’t necessarily mean overall business success.  

Your North Star is your guiding compass, defining the ultimate goal of value creation, while KPIs are individual mile markers that show how well you’re performing in key areas that support that common goal. Learn more about some of the best KPIs you can pick from below:

But that’s not all folks. There’s also another similar term worth clearing up – the difference between a North Star Metric and One Metric That Matters (OMTM). On the surface, these two look super similar, but there are core differences that keep them apart. 

Your North Star is a key metric you rally behind for long-term sustainable growth over several years. The One Metric That Matters is a short-term focus for a single team to help drive growth over a set, finite period. 

Your North Star is part of a long-term strategy, with the OMTM  designed for immediate, tactical wins.

Why is it important to have a North Star metric? 

Every product, and ultimately business, needs a North Star metric. No ifs, no buts. Having one gives you clarity, focus, and accountability across your organization. Imagine a night sky without any stars at all – it’ll be super hard to see where you’re going. Having a North Star illuminates things. 

This metric does three essential things:

1. It aligns the entire company: From your Product Team to Sales and Leadership, everyone has a clear focus on what drives sustainable growth for your business. Your North Star should be something that every team can contribute to in some way or another. 

2. Communicates your progress: A good North Star makes it super simple to track how well your product is doing, and makes it easy to communicate with your whole team. Sharing too many statistics can cause people’s eyes to gloss over. A single metric keeps the focus. 

3. Creates shared accountability: Having a North Star metric makes everyone accountable for achieving outcomes that genuinely matter, and not getting snared by vanity metrics. 

But perhaps the most important thing is that it puts other data into perspective. It’s like a pair of glasses that improves the focus. Sales numbers, customer lifetime value, and results from surveys can be useful on their own, but without the context of a North Star metric, they can be misleading. 

This North Star metric guarantees that all the metrics you choose to track point back to your one common goal. It also ensures that everything you do to improve your product is outcome-focused, preventing you from turning into a feature factory or from suffering from feature creep. 

Who is responsible for setting the North Star? 

Your North Star metric shouldn’t be set by a single person. That’s a good thing. As it’s something that the whole company aims towards, you’re going to want input from various teams to make sure the North Star is viable. 

Typically, Product Leadership and Management will have the final say on setting the North Star metric, with input from key stakeholders who are more often than not Team Leaders within your company. All these voices come together to create a North Star metric that reflects the company’s broader goals while aligning with customer needs. 

Most of the time, these are set during workshops and could be something discussed during a product value proposition workshop.

Who is responsible for achieving the North Star metric?

In short, everyone! The North Star metric you set should be something that every department and role in your business can contribute to in some way. Sales, Marketing, Engineering, the whole shebang. This is key to having a good North Star. 

For example, if your Customer Success team feels they have no influence over the performance of the metric, then it’s not a very effective North Star. They won’t be motivated to provide value when fulfilling their roles. Everyone should be able to rally around the North Star metric and use it to focus their efforts.

However, while all teams contribute, accountability typically falls to Product Managers to oversee its progress. Product Managers play a key role in ensuring that teams align their goals with the North Star metric and that resources are allocated to initiatives that drive it forward. 

So while everyone is responsible, the Product Manager is even more responsible, making sure that their team outputs are tied to the North Star. 

How do I set a good North Star metric? 

Let’s take a look at how to create a good one for yourself. Well, the first thing is making it unique to you. You can’t just go and borrow someone else’s – it needs to relate to your product vision, your product’s value, and the things you want it to achieve for your customers. 

A well-engineered North Star metric reflects what customers must do to reach their wow moment, the point where they understand the value that you bring. It should also be a forward-looking metric. Like a crystal ball, one that can help you forecast the future.

See, many metrics look backward – total sales, customer acquisition cost, subscription revenue, annual revenue, product adoption rates – they’re all good indications of how well you’ve done, but can’t inform you on what to expect. A good North Star will be able to tell you if you’re in for a good time or not. 

We’ve put together a nice little checklist to help you come up with a valuable North Star metric:

1. Does it align with customer success? Your North Star should capture when a customer gets what they need from your product. Think about the specific moment when a user experiences the value of your product and go from there. 

2. Are you focused on value, not transactions? A great North Star metric hones in on the value a customer gets from your product or service. A metric that’s too transactional, like ‘the number of orders placed’ is influenced too much by Marketing and Sales. A good alternative to this is the ‘number of packages delivered without complaints’. 

3. Can you measure it? You need to be able to measure your North Star. Focus on tangible actions like numbers and statistics. Although you may want to improve satisfaction and ease of use, it’s impossible to reliably measure these abstract ideas.

4. Is it time-bound and growth-focused? All the good examples of a North Star metric are tied to a specific timeframe, be it a measure of monthly, weekly, or daily active users. This allows you to monitor it over time. Tracking things like ‘total all-time active users’ won’t let you see how you’re scaling. 

5. Can everyone contribute? You want your North Star metric to be something that drives the whole company. If it’s something that a department has little influence over, then it’s not a good metric to focus on. Whatever you choose should be something within everyone’s control. 

6. Is it directly tied to growth? If your North Star metric increases, so should your company success. Find a metric where if you improve it, you’ll see the reward in business performance. 

7. Will the metric change frequently? You’re setting a North Star metric to see if you’re on the right path to success. You don’t want something that only updates every quarter – or dare we say every year – because at that point it’ll be too late to do anything about it. Choose a metric that has a fast feedback loop, like weekly or monthly actions. 

8. Does it apply to all users? A strong North Star Metric should be relevant to your entire user base, not just a specific subset. Focusing on something that only a portion of your users experience can create a misleading sense of company success. For example, tracking a feature only used by premium users might show growth, but it won’t reflect the broader health of your product.

Answering yes to all of these questions? Fantastic, you’ve got yourself a great North Star metric! 

Example of a good North Star metric

We’ve chatted your ear off about North Star metrics, let’s illustrate what a good one looks like with a real life example. Let’s see what a good North Star metric looks like in action. For this, we’ve picked out Zoom’s North Star metric:

Number of hosted meetings per week.

Tracking the number of hosted meetings is a fantastic metric for Zoom as it directly reflects on how users are engaging with its core feature: video conferencing. By monitoring this, Zoom can capture the recurring value active users are getting from the platform. It’s a key indicator of how often customers rely on them, letting the company understand product adoption rates and conversion rates. 

This metric is also likely influenced by their activation point. This action shows that a user is getting the necessary amount of value to ensure that they’re more likely to stick around and become a customer. Zoom will have an idea of the benchmark number for this, so will use that when reviewing the average number of hosted meetings per week to check their performance.  

What this example shows is that you don’t need to overcomplicate your North Star metric. They can be pretty simple things, giving you a top-level overview of performance that you can refine with the various KPIs that relate to this. 

How do you measure your North Star metric?

So you’ve set your North Star metric, how do you actually measure it? Well, you’re going to want to make sure you’re collecting reliable, actionable data directly from your product that ties in and relates to the metric you’ve set. Here are some rules to follow to make sure you’re measuring it all properly:

• Set up data tracking and integrations: First, make sure your product analytics tool is correctly integrated to capture the data you need for your North Star metric. You want all relevant KPIs and events to be tracked. 
• Define supporting KPIs: Your North Star should be broken down into the various KPIs that give it context. For example, a North Star that measures weekly active users would be interested in metrics like daily active users, session length, and feature engagement rates. 
• Create a dashboard: You want real-time insights without the hassle, so set up some dashboards. This makes it a lot easier for you and your team to monitor performance and the progress you’re making towards your North Star metric. 
• Regularly audit the data: Sometimes data can go wrong. Review it regularly to make sure it’s accurate and that no funny business is going on that can skew results. Make sure all your events are set up correctly. 
• Segment user groups: Your North Star should be relevant to all your users, but by segmenting the data you can get deeper insights into seeing which user groups are lagging behind. This makes it easier to design customized strategies. 
• Assess it over time: Make sure to track your North Star regularly, ideally on a weekly or month-by-month basis, so that you’re always aware of how things are doing. You’re also going to want to report on the North Star metric performance often, but how do you do that? Well, we’ll tell you. 

How do you report on the progress of your North Star? 

Since your North Star metric reflects the overarching goal for every team in your organization, regular updates on its progress are useful to maintain alignment and drive collective momentum. Here are the best ways to report on and communicate progress effectively:

1. Quarterly reviews: Schedule a dedicated section in your quarterly meetings to review the North Star metric. Quarterly reviews provide a snapshot of long-term progress, allowing you to track trends, evaluate recent changes, and discuss initiatives that may be impacting it. Make sure to include supporting KPIs that break down the factors influencing your North Star metric, offering teams insights into how their contributions are making an impact.
   
2. Monthly pulse checks: As well as quarterly meetings, consider sharing monthly updates to keep the metric top of mind across the organization. A brief, high-level update can serve as a “pulse check” to inform teams if they’re on track or if any adjustments are needed in the short term. Monthly updates also help identify early trends and allow teams to respond proactively to any issues.
   
3. Real-time dashboards: We’ve said it before, but it’s worth saying again. Setting up a dashboard gives everyone in your company an opportunity to pop in and see how things are doing at any given time – including your North Star metric. This fosters a sense of ownership and accountability that aligns all teams to the common goal.  

Regular reporting that is both accessible and insightful keeps everyone aligned around your North Star metric, helping you foster a culture built on data-driven Product Management where each team sees their direct contributions and is motivated to keep improving.

Look to the stars

A well-crafted North Star metric serves as your guiding light in the sky, aligning teams, ensuring accountability, and keeping your product strategy focused on delivering real customer value. 

Whether you’re a fast-growing startup or an established company, this North Star metric can cut through the noise of vanity metrics and point your business toward sustainable growth.

When setting your North Star, make sure it reflects what truly matters to your customers. The best North Star metrics capture the core value your product provides and are forward-looking, helping you anticipate future success. Remember, it’s not about tracking everything: it’s about focusing on what drives growth through customer satisfaction.

So, take the time to define your North Star and use it to help support your roadmap. And If you’re looking to transform the way you do product roadmaps, try ProdPad. With our free trial, you can see how it helps you streamline planning, prioritize what matters most, and keep your entire team aligned around your North Star metric – all while building better products with confidence.