How to Achieve More Customer Growth with North Star Metric

1. What is North Star Metric?
2. How to Use North Star Metric for Your Business
3. In 8 Steps to the North Star Metric
4. North Star Metric Example from Amplitude
5. Conclusion: These Benefits of Having a North Star Metric

To be successful in business and stay that way, some key figures are necessary. In addition, success depends on how exactly the goals are defined and what impact each individual product team has on the overall business.

There are some things that come together that you need to keep track of. Support in this regard is provided by the North Star Metric, which allows you to define all key figures as one, enabling you to focus entirely on business growth.

In this article, we'll explain exactly what a North Star Metric is and what benefits it brings to you and your business. You'll also learn how to implement the metric step by step.

Table of Contents

1. What is North Star Metric?

2. How to use North Star Metric for your business

3. In 8 steps to the North Star Metric

4. North Star Metric example from Amplitude

5. Conclusion: These Benefits of Having a North Star Metric

What is North Star Metric?

Translated, North Star Metric, or NSM, is the Polar Star Key Figure. Figuratively speaking, NSM is a fixed star that represents the most important measure of all your business analyses. Via NSM, you therefore summarize your most basic key figures and translate these into a specific added value for your customers. This serves as a guide for you, promoting long-term business growth.

The idea behind NSM is that the added value for your customers directly transforms into the positive growth of your business: the more satisfied your users are, the more likely they are to recommend your product and thus attract new users. This dynamic should be made measurable by the NSM.

Famous examples that can be applied to an NSM include the following:

• NSM from Spotify: Time spent listening to content.
• NSM from AirBnB: Number of nights booked.
• NSM from Facebook: Monthly active users.
• NSM from WhatsApp: Number of messages sent.
• NSM from Amazon: Number of purchases per month.

How to Use North Star Metric for Your Business

NSM is mainly used in growth and product marketing and focuses on sustainable customer growth. If you want to develop a long-term growth strategy, it's worth identifying your NSM to understand your customers and your product even better.

To precisely define your North Star Metric, you should first play through different metrics and scenarios together before deciding on a concrete one. These tips will help you on the way:

• Identify added value: Agree together on how your customers achieve the benefits and utility of your product.
• Know customer behavior: Study how your active users and loyal customers engage with your product.
• Understand customer behavior: In order to understand your customers' behavior, you should identify which metric best embodies positive growth in this area. This key figure will be your NSM.

In 8 Steps to the North Star Metric

Once you have specifically defined what you want to focus on in customer growth, you can now focus on implementing your NSM. We'll show you now in which steps you should approach this:

1. Your North Star Metric reflects the Success moment of your customers.
2. Your North Star Metric expresses the Value of your product for your customers.
3. Your North Star Metric is measurable.
4. Your North Star Metric is measured on the basis of a certain time period.
5. Your North Star Metric is under your own control and is not influenced by external factors (other than your customers).
6. Your North Star Metric directly reflects your Business growth.
7. Your North Star Metric is influenced by the entire Pirate Funnel.
8. Your North Star Metric grows at a certain frequency (e.g., daily).

Your company should basically have a single NSM, with which alone not every department can work. Here, additional key figures come together that are relevant for the company-wide NSM. A correctly selected NSM should reflect the result of the collaborative and interdependent activity of all departments.

Moreover, your NSM can change over time as your company grows and develops. Accordingly, your NSM should adapt to this further development so that you can meet new requirements from the industry.

North Star Metric Example from Amplitude

The theory is set, but what does the practical experience of North Star Metric look like in other companies? In this section, we'll show you how the firm Amplitude, which deals with its analytics tool with product optimization, uses NSM for themselves and their customers.

About Amplitude

Amplitude is a product analytics solution that is suited for both large enterprise customers and start-ups and scale-ups. The tool helps companies analyze their own product users' behavior to optimize metrics such as conversion, activation, and retention. Currently, Amplitude operates over 40,000 digital products from over 180 countries worldwide. Moreover, Amplitude has more than 1,400 customers, including Atlassian, Instacart, NBCUniversal, Shopify, and Under Armour.

Tips for Identifying Your North Star Metric

Together with its internal product teams and customers, Amplitude has gathered the following seven practical tips that product leaders should know about North Star Metric and that can help you identify your NSM:

1. A North Star Metric tells a story: A North Star Metric helps to write a compelling story that brings teams together and allows them to become part of this story. When a NSM works, it provides a benchmark for all team members. This creates a clear goal that everyone can work towards. This way, every employee finds themselves in this story, leading to the meaningfulness of their own work. For example, a team might work to improve the number of meetings that customers can book, rather than having the team develop a product for planning meetings. In the end, the NSM becomes a unifying story for the entire product team.
2. The North Star Metric ensures organizational alignment: Many management teams look at the impact on business from a financial perspective. That makes sense. To grow, a company needs to bring in more revenue. However, 'earning more money' is a very general goal that does not take into account what teams do on a daily basis to create more value for users. In every company, there are many teams with different goals and initiatives. To build a company, you also need to thoroughly think about the product itself. A North Star Metric provides everyone with a metric to group around. Each team can then find a way to improve the inputs that flow into the North Star Metric.
3. The North Star Metric can help with uncertainties: In the course of business growth, teams often pull in different directions. There can be a lot of uncertainty about which direction to go. Without a specific metric to pursue, product teams sometimes struggle to make progress. The NSM can also help you reject new ideas. This makes the team much more focused and makes it easier for you to make decisions when things are unclear.
4. The North Star Metric is like a guide: Although the NSM is a strong force within a company, it is not the only metric that matters. A product team should make sure that other metrics are also considered. A business is complicated, and relying solely on the North Star simplifies the work that needs to be done for business growth too much.
5. The conviction of the leaders is essential: A North Star is supposed to align an organization uniformly. Therefore, the buy-in of the leaders is essential. After all, a North Star Metric goes hand in hand with the global business orientation. An NSM must take into account revenue growth, which is important for leaders. At the same time, it should illustrate the impact on the business and the overall value. A North Star Metric will guide the strategic vision of a company. The leaders on board must be willing to share, promote, and make decisions based on this metric. And they must take it as seriously as the product team.
6. Visibility is a priority: An NSM is great in theory, but if no one sees it, no one will care. That means that the North Star Metric should be stated everywhere whenever possible. As soon as employees realize that they are all responsible for this one metric, there is a positive resonance. Integrating the North Star Metric into other artifacts - such as kickoffs, OKRs, decision reviews, strategic planning - is essential. Try to make it visible in emails, presentations, and throughout the organization.
7. Choosing a North Star Metric can take time: As effective as an NSM is, it can take a long time to land on the right one. It can also turn into a chaotic process. So how can you choose a North Star Metric that enables organizational alignment? Here, Amplitude recommends conducting workshops with different groups and gathering remarks from various stakeholders. The North Star Playbook also provides a basis. 

Conclusion: These Benefits of Having a North Star Metric

The North Star Metric offers you a 'key figures sky' on which you can align all your marketing and sales measures. In addition, you can determine the concrete added value for your customers with the NSM, allowing you to continue to grow. Your NSM should be able to break down or expand to all departments of your company so that all employees work in the same direction and with the same goal.

Every day, new tasks and challenges arise that deal with growth steps. Here, you should always remind yourself of what exactly THE one essential metric is that will make your company grow in the long term. This is exactly what the North Star Metric is for. It should be at the center of your growth strategy. All activities should directly or indirectly aim at this metric.

We summarize for you once again the key advantages that arise with a North Star Metric for your company and customer growth:

• Focus: The entire company should share the same focus. At the team level, additional key figures can still be added, but overall all employees work towards the same goal.
• Clarity: Everyone should be able to recognize at a glance how well the company is doing.
• Customer Centricity: Your company should aim to create added value for your customers. Customer loyalty and customer benefit is brought more into focus. Measures that increase revenues in the short term but are disadvantageous for customer growth in the 'long term' are pushed back.

Do you want to delve deeper into the North Star Metric? Then download the North Star Metric Playbook.