Polaris, also known as the North Star, is neither the closest to Earth nor the brightest in the sky. It is remarkable only because it appears stable even as the entire northern sky moves around it.
So, irrespective of the time of night or season, if you seek to sail northwards, you follow the North Star.
A North Star metric does exactly that for a business. Unlike goals or objectives, North Star metrics are unambiguous.
No two metrics contradict or confuse each other. They serve as the point to which you always recalibrate if you ever find yourself veering away.
In this blog post, we help you choose your North Star metrics, build a roadmap to get there, and track your progress along the way.
Identify Your Team’s North Star Metric and Grow to New Heights
- What are North Star Metrics?
- Importance of North Star Metrics
- Examples of North Star Metrics
- Identifying Your Team’s North Star Metric
- 1. What are your customer’s moments of success?
- 2. How can you measure your customer’s moment of success?
- 3. What can you do today to increase business success?
- 3. What contributes to achieving the North Star metric?
- 4. How do external factors influence your North Star metrics?
- 5. How often can you track the performance of your North Star metric?
- How to Manage Your North Star Metric
Summarize this article for me pleaseWhat are North Star Metrics?
North Star metrics are measures of success that align with a business’s long-term growth trajectory. They are fundamental to the success of the business and are unaffected by periodic ups and downs.
Especially popular among product-led growth teams in software startups, North Star metrics measure why your customer continues buying from you.
A good North Star metric is characterized by the following.
Reflecting customer value: What do we need the customer to get in return for the price they’re paying? For entertainment products like YouTube, Spotify, or Facebook, it is the time spent on the platform. For a communication product like Slack, it is daily active users. For Amazon, this might be monthly transactions or products purchased.
Related to revenue: This doesn’t imply that revenue is a North Star metric, though it can be. However, an effective North Star metric connects customer value to revenue.
Applicable to the entire organization: The North Star metric doesn’t change based on your team/role. It remains constant, with nested targets and tasks that may vary for each team.
For example, if your organization’s North Star metric is ‘daily active users,’ everyone from product, marketing, and sales to customer success must design their work to meet it.
Focus on the long-term: North Star metrics don’t change yearly. They are tied to long-term growth and must be pursued over multiple years. Therefore, they must be specific yet broad enough.
With key performance indicators (KPIs), project objectives and key results (OKRs), One Metric That Matters (OMTM), and dozens of other frameworks already in practice, why should you consider North Star metrics? Let’s take a look.
Summarize this article for me pleaseImportance of North Star Metrics
Good North Star metrics provide direction for the entire organization. They help every team establish their roadmap, set timelines, and decide who takes the oars, when, and how.
Effective North Star metrics provide the following.
Clarity
A good North Star metric makes an unambiguous statement about what the organization is journeying toward. It leaves no room for subjective interpretations, irrespective of how near or farther from the customer the team member is.
Org-wide focus
It brings the entire organization together towards a common goal. Good North Star metrics eliminate internal conflicts about performance measurement and priorities.
When there is a heated debate between sales and marketing about the performance of lead generation campaigns, the North Star metrics bring alignment.
Customer-centricity
An effective North Star metric focuses on customer value, aligning everyone towards that. It encourages every team member to focus on doing more for the customer so they realize higher value and are willing to pay more.
Among product development teams, this can be incredibly transformative. When the North Star metric is clear, they will ship features that drive towards it, even when other shiny new objects appear more attractive.
Purpose
Modern organizations, especially startups, are built around purpose. Gen Z, too, looks for whether a company’s values align with their own before accepting employment. The North Star metric reflects the values and mission of an organization, guiding decision-making for all stakeholders.
With clarity, focus, customer-centricity, and purpose, a company’s North Star metric helps improve work performance, rallying everyone towards a common goal.
All that’s great, but what are good North Star metrics? And, can there be multiple north star metrics? Here are a few examples.
Summarize this article for me pleaseExamples of North Star Metrics
Your North Star metrics might depend on several factors, such as the product you sell, the industry you operate in, your company growth, growth efficiency, the customer value you create, your business model, and so on. Here are a few North Star metric examples across these factors.
1. Revenue
The industry has big debates about revenue as a North Star metric. Some argue that the primary purpose of any business is to generate revenue. Therefore, revenue metrics such as annual recurring revenue (ARR), monthly recurring revenue (MRR), and gross monthly revenue (GMV) are the best North Star metrics for the entire company.
Others say that if you set ‘revenue’ as the primary metric, you’ll be too focused on customer growth with tactics like pricing or offering discounts. Moreover, “make $XM” doesn’t exactly sound inspirational to employees!
So, revenue and profitability as North Star metrics risk counterproductive in the long term.
2. Time spent on platform
Time spent is a popular North Star metric in the entertainment or social media space, in organizations such as Spotify, YouTube, LinkedIn, and Facebook.
Time spent serves as a great North Star metric because it perfectly captures the value that a customer derives from the product, i.e., entertainment. To
On the business side, the more time a user spends on the platform, the higher the engagement and, by extension, revenue. While obsessing over a metric like this, it’s crucial to also under customer acquisition cost—the money spent to get them onto the platform.
Taking this a step further would be to actively track weekly active paid users—that actually impact your revenue.
However, it is also important to note that using time spent on the platform as the North Star metric pushes developers to create addictive products that are causing actual harm, especially to the most vulnerable populace.
3. Active users
Another dimension of the time spent metric is daily, weekly, or monthly active users. This especially applies to products that don’t involve content or the need to stay logged in.
For example, a SaaS product for invoicing, a CRM, a project management tool, etc., aren’t built for users to spend time on. The goal of such products can be quite the opposite, such as reducing the time spent on invoicing, customer communication, or project management. These products are designed to be used periodically to be more efficient.
Therefore, instead of time spent, the better metric here is the number of people/organizations using the product. Daily or monthly active users is a great North Star metric here.
Some organizations use active ‘paid’ users as a North Star metric, combining revenue and engagement goals. An extension of this is also customer lifetime value—which combines the revenue you get from the customer in the entire duration of their relationship with you.
Remember what you set out to build while using active users as your North Star metric. For example, if your app helps users file their taxes more efficiently, it is unlikely to be used any time other than Q4, so monthly active users might remain near zero for the rest of the year.
Depending on your business model, you might choose yearly active users as your North Star metric. Or include investment or expense management features into your app to make users visit more frequently.
4. Actions performed
Depending on the primary service that a product offers, the ‘number of actions performed’ refers to the number of times the customer uses the service.
- For a communication tool like WhatsApp or Slack: Number of messages sent
- For a ride-sharing app: Number of rides booked
- For an e-commerce platform: Number of products bought
- For a fintech company: Number of transactions processed
- For a travel company: Number of journeys booked
Actions performed gets to the very basics of why a product was built and what value it offers a customer. Often, the action is directly related to the product’s price, multiplying revenue when its number grows.
For example, Uber’s primary offering is a ride, which it prices dynamically based on various factors. When the North Star Metric—growth in number of rides—is achieved, the revenue (number of rides x price) also grows.
5. Differentiator
Optimizing your primary differentiation in the marketplace can be a good North Star metric. If good UX is your primary differentiator, capitalizing on and improving it must be the fundamental goal of everyone in the business.
UX works best as a North Star metric in crowded markets. For example, when launching yet another orange juice for the Walmart aisle, its container better be easy to drink from, reusable, and even entertaining if you expect to stand a chance.
Similarly, customer satisfaction, accessibility, customizability, etc., can also work as North Star metrics for your organization.
While the recommendation is that you choose one North Star metric and work towards it, there are plenty of options. Before you pick yours, consider the following.
Summarize this article for me pleaseIdentifying Your Team’s North Star Metric
Identifying a metric that guides the entire organization over the next few years can’t be taken lightly. The decision must consider insights from sales, marketing, product, human resources, customer success, finance, and the leadership team. It needs to combine your vision for the future with the realistic demands of the market.
This would be especially challenging if you’re an early-stage startup without clear market feedback. Here is a commonly used North Star metric framework to help. It suggests several questions to find answers for before identifying your North Star Metric.
The best way is to bring together key people from the above-mentioned teams to explore answers from all perspectives. Consider various metrics and their pros and cons before you finalize one.
For the purposes of this exercise, imagine you’re launching a meditation app called ‘Deep Breath.’ Here’s how you might identify your team’s North Star metric.
1. What are your customer’s moments of success?
The answer to the above question will help articulate customer value. Think about the moment in your customer’s lifecycle when they truly experience the result of buying your product.
For Deep Breath, this would be every time the customer feels reduced stress or better sleep due to using your product.
2. How can you measure your customer’s moment of success?
While, in reality, the moment of success is the customer’s sigh of stress relief, you can’t measure it and put it on your reporting spreadsheet. You need to make it quantifiable.
A meditation app can’t be app downloaded because the customer’s moment of success doesn’t happen when they sign up or intend to meditate.
It can’t be the number of classes begun because the real customer value is when they complete the session.
Therefore, the number of meditation classes completed is the best North Star metric for Deep Breath.
3. What can you do today to increase business success?
Now that you’ve established what creates customer value, it is time to connect that with your revenue.
Your business model defines how you generate revenue. Deep Breath can charge customers in the following ways.
- A flat fee per meditation class
- A subscription for unlimited classes
- A freemium model with paid guided meditation sessions
- Advertising-driven model
If you charge a flat fee per class, your North Star metric will be ‘number of classes completed.’
If you charge a subscription, your North Star metric will be the ‘number of paying users who complete meditation sessions daily/weekly/monthly .’
If you offer a freemium model, your North Star metric is the ‘number of guided mediation sessions completed.’
In essence, use this question to connect the value the customer is gaining to what they are paying for it.
3. What contributes to achieving the North Star metric?
While the North Star metric is the direction the entire organization travels, setting it up as the only goal can lead to chaos. Each individual might interpret the journey towards the North Star in their own way, pulling the organization in different directions.
So, break down the journey to the North Star into steps.
Deep Breath has decided to choose ‘consumption growth’—i.e., number of meditation classes completed’—as the North Star metric. There are various steps to get there.
- Marketing input metrics: Website visits, newsletter subscriptions, podcast listeners, app downloads, trial sign-ups, etc.
- Sales input metrics: Conversion to paid subscriptions, annual subscriptions vs. monthly subscriptions, etc.
- User experience metrics: Time spent on app, streak of classes taken, etc.
- Product development metrics: Time taken to start each class, drop-off rates before payment page, etc.
- Community engagement metrics: Number of meditation guides onboarded
Individuals can set goals for themselves, navigating their journey towards the organization’s North Star. This is especially helpful for setting leadership goals around hiring, go-to-market strategy, and board interactions.
One of the simplest ways to break down goals into tasks is David Allen’s Get Things Done (GTD) methodology. Get started with the ClickUp GTD template now.
4. How do external factors influence your North Star metrics?
A good North Star metric should remain largely undisrupted by external factors. If weather, flight delays, political changes, etc., influence your North Star metric, it’s time to rethink it.
Deep Breath may be undisturbed by these changes overall because it is a deeply personal application. Yet, it’s essential to keep track of global/national trends that influence sales performance and adjust your North Star metrics as needed.
5. How often can you track the performance of your North Star metric?
As the North Star metric helps navigate your journey, you should be able to check at short, regular intervals that you are on the right track. Therefore, your North Star metric must reflect weekly or at least monthly growth.
For example, if Deep Breath’s North Star Metric is the ‘number of customers who give positive reviews on the App Store,’ it is a once-in-the-life-cycle activity for each customer. They might take months before leaving a review, if at all. This doesn’t give you feedback soon enough.
Therefore, Deep Breath needs a metric that moves the needle regularly.
Identifying your North Star metric is the first step in your long journey. At each further step, checking your sails and tracking progress is essential. Here’s how you can do that.
Summarize this article for me pleaseHow to Manage Your North Star Metric
A good project management software is not just about tracking tasks, but your business success, too. It also needs to be a product-led growth software tool to enable that.
ClickUp is designed with this in mind, bringing together tasks, milestones, projects, documents, and more towards your North Star metric.
Set your goals
Set your North Star metric in your goal tracking app. Depending on how you’ve defined the metric, you can set it up as any of the following ClickUp goals.
- Numerical values: e.g., 1000 bugs quashed
- True or false: e.g., Milestone reached
- Currency target: e.g., $3 million in revenue
Write detailed descriptions of each goal to ensure your team members understand their roles clearly. Make the North Star metric visible to everyone in the organization so they can roll up their targets and projects toward achieving this.
Break the goals down into tasks
Use this section on ClickUp to link your product management KPIs and metrics to the North Star metric.
Here is where you can set sprint targets, weekly sales targets, etc. You can also interpret them as tasks.
For example, make ten customer discovery calls or schedule three customer demos every week. Depending on your project workflow, create tasks that cumulatively move the needle on your North Star metric.
Organize your tasks and goals
Track daily/weekly wins by organizing them with ClickUp goals. View project roll-ups to see how tasks contribute to the goal. Set targets within each task to track how much progress you’re making. Put related ones into a folder.
Integrate project schedules to these tasks to meet deadlines. Set priority levels for each goal and schedule the high-priority ones for immediate action.
Track and monitor your progress towards the North Star
Use the ClickUp Dashboard to track everything that is important to you, such as task progress, goal achievement, or even team workload.
You can also create employee scorecards and objectives and key results (OKRs) right within ClickUp for regular reviews.
Summarize this article for me pleaseSet sails towards your North Star with ClickUp
Your North Star is not just about knowing where to go. More importantly, it is about getting back on-route when the winds are too strong and throw you off-path. It needs to be sustainable over years (or at least months) not to disrupt the work that’s going on. It should also be easily accessible and visible to every team member, especially during times of workplace existential crisis.
To make the most of your North Star metric, you need a growth-hacking tool like ClickUp. Use ClickUp goals to identify, set, manage, track, and achieve your North Star metrics.
Measure input metrics with task completion targets. Measure output metrics, such as sales numbers or app downloads, with numerical/currency targets.
Get complete visibility into your goals, targets, tasks, and team performance, all in one place.
Everything you need to stay organized and get work done.
