What Is a North Star Metric?: An Overview of an Important Concept

/ Editor - 1 December 2022
Are you struggling to measure results? Maybe you don’t even know what metrics matter when it comes to measuring ROI. In this post, we’ll explain what a North Star metric is and why they matter.

There are lots of different types of metrics that you could track, but only some of them actually matter. We’ll cover the one that really matters (North Star Metrics) and how to find yours in this post.

North Star Metric is the single most important metric you should focus on as a leader because it directly correlates to your goals. They tell you exactly where you stand today and help you determine where you need to go next.

In order to drive sustained growth, you need to understand your customer’s needs. And you need to measure whether you’re meeting those needs.

To do this, you need a North Star Metric.

Your North Star Metric is your most important metric. It can be anything; it can tell you which customers are growing fastest and which ones are slowing down. It can tell you which products and services are working well and which ones aren’t.

All in all, no matter what your North Star metric is, it needs to give you an objective view of your company’s performance, helps you identify trends and patterns and unite your teams to one growth measurement.


Only One North Star Metric:

Your North Star Metric can only be one metric with mirco metrics connected to it. By focusing on your North Star Metric, you can avoid chasing after shiny objects and instead work on building a strong foundation. With micro metrics that connect to your North Star, so if your North Star Metric is the main driver of growth then the mirco metrics help show you the way, giving more context.


How does your North Star Metric look?

Does it reflect the core value your product provides? How many customers are growing faster than others? What types of customers are growing fastest? Which products and services are delivering the most value?

These questions are vital to understanding your North Star Metric. Once you answer them, you’ll be able to use the data to guide your future decisions.

The North Star Metric is a powerful tool that can help you build a strong growth foundation for your business.


In brief, a North Star Metric is the single most important metric you should focus on as a leader.

Why? Because it will tell you where your business is going. And because it will give you insight into how your business is performing.

You’ll be able to make better decisions about your business. You’ll have a clearer picture of your strengths and weaknesses.


Why is a North Star metric important? -The Benefits:

If you are still not convinced why North Star metric is so important, then let me try explaining the benefits in more detail.

North Star Metrics are a way to measure how well your organization is doing against some key metrics. They help you understand where you stand relative to others in your industry, and provide guidance about whether you’re moving toward your goals or falling behind.

A North Star metric isn’t just a number; it’s a guiding principle that helps you focus on the things that matter most to your customers and keep you pointed in the right direction.


1. Alignment

The North Star Metric provides an overarching framework for all of your goals and metrics. It helps you define what success looks like at the highest level.

It also ensures that everyone knows where they are going and how they are measuring progress towards achieving those goals.


2. Transparency

A North Star metric can provide a bird’s eye view across your entire organization. This helps reassure employees who may be concerned about their own job security, which improves employee retention and reduces turnover.


3. Customer focus

Your North Star metric is the key performance indicator that best represents the value your company brings its customers. This metric helps you stay focused on delivering an exceptional customer experience across all aspects of your business, which has its own advantages such as boosting revenues and retaining customers.

In short, a North Star metric is a simple yet effective way to make sure you’re always heading in the right direction.


Examples Of North Star Metrics:

Here are some examples from other types of companies.


Airbnb’s North Star Metric:

Airbnb has an interesting North Star Metric. Nights booked.

This metric is simple. And yet, it represents something important.

To Airbnb, nights booked represent the value they provide to their guests. Guests pay money to stay in Airbnbs. So, if they book fewer nights, it means less revenue for Airbnb.

This metric also represents the value Airbnb provides to its hosts. Hosts earn income by renting out their homes through Airbnb. So, if they rent out fewer nights, it means they’ll earn less income.

In addition to representing the value they provide to guests and hosts, nights booked also represents the value they provide to the community. By connecting travellers with local communities, Airbnb helps build stronger connections between people and places.

So, Airbnb uses nights booked as a North Star Metric because it represents the value they provide across three distinct categories: guests, hosts and the community.


Facebook’s North Star Metric:


Facebook’s North Star metric is Daily Active Users (DAUs). DAUs is a measure of the number of active daily users on Facebook.

Daily Active Users is Facebook’s primary metric because it represents the value Facebook delivers to its users. Facebook wants to increase DAUs because it increases the amount of content available to users. More content means more engagement. More engagement means more interaction. More interaction means more social capital.

More social capital means more potential friends. More potential friends means more influence. More influence means more reach. More reach means more exposure. More exposure means more traffic. More traffic means more ad revenue.

Facebook’ s North Star Metric is Daily Active Users because it represents the value it delivers to its users.


What Is An North Star Example For An eCommerce Store:

An eCommerce North Star is a leading indicator of future sales success. It’s a measure of customer satisfaction and retention. You can identify it by asking yourself questions like: What does my customer’s journey look like? How will I know if my customer is happy? And, what actions will I take next?

In the case of your ecommerce store, you may ask yourself questions like: What actions will I take next after someone places an order? Or, what action will I take next after a customer makes a purchase?

For Example:

let’s say you sell shoes online. One of your goals is to find out why customers leave your website without completing their purchase. After you’ve found out why customers leave, you can decide whether to change your site to fix the problem.

This is where your eCommerce North Star comes in. Once you figure out why customers leave your site, you can determine whether to change your site. If you find that customers are leaving due to technical problems, you can work on improving your site’s performance.

Your eCommerce North Star is the leading indicator of your future success. It’s a measurement of customer satisfaction and retention, and it helps you plan for the future.


B2B North Star Example:

This is a great example of a B2B North Star Metric. You can see that there’s a lot of data here. But if you were able to boil down the data to a single number, then you’d know exactly where you stand and what you should be doing next.

In this case, the metric is “new user activation”. It shows how well you’ve been converting new users into paying customers. And it’s important to note that this isn’t just any old metric. This is a leading indicator of future customer retention and growth.

So if you’re trying to grow your business, then you need to find out how well you’re converting new users into paying ones. And you can do that using a metric like this one.

As you can see, this metric was created by looking at the data from thousands of new users. Then they looked at how many of those users actually converted into paying customers.

They found that only 10% of new users convert into paying customers. That means 90% of new users never become paying customers. So if you want to grow your business, you need to figure out why that is.

That’s where the data comes in handy. By analyzing the data, they learned that new users don’t convert because they didn’t receive enough support after signing up. So they built a solution called “Support Assistant” which makes it easier for new users to sign up and start receiving support.

Now they’re seeing a much higher percentage of new users convert into paid customers. That’s why they call this metric “New User Activation”.

But even though this metric is showing that Support Assistant is working, it still needs work. Because it doesn’t tell them anything about whether the feature is meeting its goals.

So they decided to add a second metric to measure how well the feature works. And that’s “First Order Completion Rate”. Now they can compare these two numbers to see which version of Support Assistant is performing better.

Once they understand which version is performing better, they can decide whether to keep improving that version or move on to the next one

How do I create a North Star Metric for my business? To get started with creating a North Star Metric, follow these steps.


Every Product Needs a North Star Metric – Here’s How to Find Yours:

Why every product needs a North Star Metric:

All in all, there are two main reasons why every product needs a North Star Metric:

  1. To help guide decision-making.
  2. To ensure that everyone understands what success looks like.

How do you find your North Star Metric?

  1. The first step is to identify the valuable outcomes for your customers.
  2. Next, find out which ones are most valuable, that you want to achieve.
  3. Next, think about the different ways you could measure this outcome.
  4. Pick one and put it into a dashboard.
  5. Finally, make a list of ways you could improve this and what mirco metrics could help map it out.



In conclusion, a North Star metric is a measurement system that allows you to compare data across multiple metrics. For example, let’s say you want to know which website has the highest bounce rate (the percentage of visitors who leave after viewing only one page). Using a North Star metric, you’d look at each page individually and calculate a bounce rate based on that information. Then, using another metric like average session duration, you’d be able to see whether or not the site had a high bounce rate despite having a relatively short average session length.

A North Star metric is a powerful tool because it lets you measure performance across several dimensions simultaneously. That means you can use it to identify problems across the board without needing to dig through individual pages and reports. In fact, North Star metrics are often used to help companies decide where to focus their efforts. They’re especially useful for identifying areas of weakness within a company, since they allow you to quickly spot trends that aren’t readily apparent from traditional reporting methods.

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