You also probably also how important it is for your business and that you better find yours better sooner than later.
But first, let’s take things from the start.
In the vast galaxy of growth metrics, what is the one metric that can show you the way?
The North Star Metric, henceforth NSM, is the single metric that can capture the essence of your business’s growth and what you need to measure in order to maximize.
Once you find your NSM, it becomes your business compass, pointing you in the right direction. By following the NSM you know you’re on the right track and making progress towards your ultimate objective.
What is important to remember, and you will realize as you keep reading this very article, is that NSM is not just about your business and its (vanity) metrics. It’s also about your customers.
Ultimately, the NSM is the metric that truly reflects the value your business delivers. And the value your customers find.
Now that you know what NSM is about, you probably want to know what it can offer to you, your team, and your business.
Well, finding your NSM can help your company in many ways.
In your marketing or business career, it’s very possible that you’ve come across both these terms, North Star Metric and One Metric That Matters. And maybe you thought that these are two terms that describe the same thing. But they don’t.
On the one hand, there is NSM. And as we saw, the NSM is the one key metric that captures the core value your business -as a whole- delivers to customers and focuses on long-term growth.
On the other hand, there is OMTM, a similar concept, albeit with one key difference: OMTM concerns a specific team each time and for short-term periods.
More precisely, here’s how they are further different:
Scope: The NSM is focused on identifying a single metric that captures the core value of the business. However, OMTM has a more narrow scope and it’s focused on identifying a single metric that measures progress towards a specific goal or objective.
Timeframe: The NSM is oriented towards long-term business growth and success, providing a guiding star that aligns the entire organization. In contrast, the OMTM is more focused on short-term performance measurement and decision-making, for shorter timeframes or specific campaigns.
Impact: The NSM captures the total impact of the business on its customers, encompassing multiple dimensions and touchpoints. On the other hand, the OMTM is often more specific and targeted, focusing on a particular aspect or goal within the business.
Flexibility: The NSM is a relatively stable metric that represents the enduring value proposition of the business. It may evolve over time but tends to remain relatively consistent. On the contrary, the OMTM can change more frequently, along with any short-term goals and priorities shifts. This way, it allows for flexibility in adapting to changing circumstances and objectives.
Different companies use different North Star Metrics.
Finding the right NSM is different from industry to industry. Here are a few examples of the different kinds of NSMs, companies use according to the industry they belong to:
However, this doesn’t mean that all businesses in the same industry use the same NSM. Keep reading to see why this might not be the case.
And here are some examples of what the NSM is for some of the biggest SaaS companies—both vertical and horizontal.
Intercom’s vision is to create a platform for easier communication between the business and the user. In its essence, it’s a messaging platform and its NSM is thought to be “The number of customer interactions per customer”.
Shopify provides helpful services to online stores, such as payment processing, marketing assistance, shipping support, many tools for engaging with customers, and some great Shopify themes for blogging that can make your blog content pop. Shopify’s North Star metric is “Each merchant’s Gross Merchandise Volume (GMV)”, according to Helen Mou, Shopify’s Product Lead.
HubSpot is one of the most popular CRMs out there. It stands out for offering a comprehensive suite of products that cover Sales, Marketing, and Service. And according to the VP of Growth at Hubspot, they are more focused on a team than a personal level, therefore their NSM is “The number of weekly active teams”.
The popular video call platform has a pretty straightforward NSM: “Average weekly hosted meeting”. This number represents Zoom’s growth and its success overall. The people at Zoom keep a close eye on this number all the time to make sure it keeps getting bigger.
Docusign provides a solution for organizations to handle electronic agreements. Within the DocuSign Agreement Cloud, they offer a service called eSignature. Therefore, the NSM that made the most sense for them is the “Number of Documents Signed”.
Spotitfy’s users get the most out of the app the more they engage with it. In practice, this translates to the time they spend listening to music and podcasts.
Therefore, the NSM that makes the most sense for Spotify to use is “Time spent listening to music”.
By now you must have familiarized yourself with the NSM. So it’s an excellent time to learn how you can find your North Star Metric for your own business.
To begin the process of finding your NSM, start by clearly defining your business goals and objectives.
Consider what you want to achieve in the long term and the key outcomes that you are looking for.
What makes your customer tick? Try to take a deep dive into understanding your customers’ behavior and motivations. This analysis will help you uncover why your customers use your product or service, what problem it solves for them, and the desired outcomes they seek.
Once you’ve done this, it will be easier for you to identify the key factors that drive customer success and satisfaction.
Based on your previous analysis, identify a set of key metrics that align with your value proposition and customer motivations. Consider factors such as revenue, customer engagement, customer retention rate, or any other relevant metric that can mirror the effectiveness of your business.
Here are a few key metrics ideas:
Ensure that your NSM applies universally to your target audience. It should be relevant across different customer segments and accurately reflect the value delivered by your product or service.
Consider using tools like customer segmentation or market analysis to validate this universality.
An effective NSM can be influenced by everyone in your company – and by every stage of the growth funnel.
Be it an increase in Acquisition, Activation, Retention, Referral, or Revenue, it should reflect upon your North Star Metric; if there is growth in any of these stages, your NSM should also show growth.
Now it’s time to actually select what your NSM will be. Review the key metrics you have identified and select the one that best represents the core value your business delivers to customers and significantly impacts your growth. This metric should be indicative of customer success, and align with your long-term objectives.
Finally, it should serve as a clear and concise measurement of your business’s overall performance.
Now that you’ve chosen your NSM make sure to begin measuring it the right way.
The frequency depends on the nature of your business, the rate of change in customer behavior, and the availability of data.
From startups to big tech companies, every business should try to find its North Star Metric. Your NSM will be the backbone upon which you want to grow your business; the metric of all metrics.
As a startup company, you aren’t going to need more than 1 NSMs at the beginning. However, when you offer distinct products or services from the same business, then it’s very likely that you are going to need more than one.
And if you need any help finding your North Star Metric, let us know!
I write for GrowthRocks, one of the top growth hacking agencies. For some mysterious reason, I write on the internet yet I’m not a vegan, I don’t do yoga and I don’t drink smoothies.
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