Why you must find your North Star Metric
What does success look like? Is it how much money you make? How many people know your name? How many lives you improve? If you don’t know it, you can’t reach it. And that’s why you need a North Star.
The North Star isn’t the only star in the night sky, but it is the brightest. And this is where the concept of the North Star Metric (or NSM) comes from.
It’s the idea that, while there are many different things that you should track, measure and work towards as a business, there is one metric that matters above all others.
It isn’t a KPI. It’s a big picture goal that encompasses a brand’s larger purpose and value.
As Rich, our Experience Design Director put it in his Design Like a Scientist webinar; “The North Star Metric should define the relationship between the customer’s problem and the problem you’re trying to solve”.
The NSM versus marketing metrics
Let's take the tech recruiting platform Codility as an example.
The business is likely tracking a number of metrics to evaluate the success of their marketing, product, and ultimately their bottom line, including:
- Site visitors
- Leads through the site
- Conversations with tech-driven businesses
- Demos booked
- Conversion/sales rate
These are all highly valuable data points, but these aren’t a North Star Metric.
Codility exists to help businesses hire better engineers and to help engineers find rewarding roles. This is the value they provide and the problem they solve.
Therefore, the NSM for this business might be 'Number of candidates placed using the platform’.
To give you a few more examples:
- For Spotify, it’s how long people spend listening.
- For Slack, it’s the number of active daily users
- Airbnb’s NSM is the number of rooms booked.
These are the metrics that matter, the ones that connect what the business does with the action it wants its customers to take.
Why find your North Star Metric?
In the world of big data, focusing on one metric can seem simplistic.
For years, we’ve been told about the importance of collecting data from multiple sources, analysing it, and collating it to produce a big picture overview.
But the two aren’t mutually exclusive.
Every team will always have its own unique KPIs and goals. But when they’re all aligned with that one ‘North Star’, everyone pulls in the same direction.
It gives you a single, ultimate focus on what you want to achieve. Think of it as your business' yellow brick road.
Let’s look at those examples in more detail:
At Airbnb, they focus on the number of rooms booked.
This means everything the company does – from its internal processes to making it simple to book – is aligned to this ultimate end goal.
If you use Spotify, it’s easy to see their NSM is ‘time spent listening’.
Curated playlists, recommendations and autoplay are all designed with this metric in mind.
All of which creates a better experience for users and increases revenue for the business.
Your NSM naturally leads to growth
There are lots of different paths you can take and opportunities that pop up. Sometimes, it’s not easy to know which to grab.
When you know your North Star Metric, it’s easier to evaluate the value of different activities against it.
As the NSM is tied to your purpose and the value you offer customers, focusing on it naturally fuels growth.
Running a North Star Metric workshop
Finding your own NSM can be tricky so we suggest running a workshop. It will only be effective if you break down silos, and include people from different departments.
Your North Star Metric cannot just be driven by one specific team, like the marketing team or the product team.
It has to be something that every department and every person can align with.
Make an effort to distance yourself from the ins and outs of each specific team, and take a good look at your business from an organisational point of view. Ask yourselves:
- What’s our ultimate purpose? Why was the business created in the first place?
- What moves the needle for us, and what are simply vanity metrics?
- What is the one thing that is most valuable to both us and to our customers?
The true value of the NSM
As we covered in a previous article on how to write a better digital brief – better results often come from asking better questions and exposing your assumptions.
The benefit of bringing multiple people together to brainstorm your NSM is having those critical conversations about your purpose, your wider strategy, users, customers and value.
In doing so, you’ll get an invaluable insight into what really matters in your business – and as a result, you’ll build a better one.