The North Star Metric is an extremely simple, powerful concept. But it's largely misunderstood.

In this post:

1. What is a North Star Metric?

2. Common Misconceptions

3. Recommended Classification

——

Let's tackle them one by one:

1. What is a North Star Metric?

The term has been popularized by Sean Ellis, also known for coining "growth hacking" while being a growth marketer at Dropbox.

In the Growth Hacking world, North Star Metric:

• Is a single metric. The goal is to create focus.

• Is easy to understand, enabling everyone to speak the same language.

• Is customer-centric. Reflects how customers get value from the product.

• Ideally, it ensures the value is sustainable, typically by forming habits.

• Represents progress toward vision/mission, fostering alignment and inspiring teams to move in the same direction.

• Is quantitative. It relies on numbers, not opinions.

• Is actionable. You take action based on how it changes

• Serves as a leading indicator of your long-term business success.

——

2. Common Misconceptions

It's important to clarify what the North Star Metric is not:

• A few metrics. While a company may select a few key metrics, referring to them as "North Star Metrics" is a misunderstanding. At the same time, a single North Star Metric is often accompanied by a set of "input metrics."

• A metric focused on business value, like LTV/CAC. This overlooks the essential aspect of being customer-centric. Besides, can your team truly get excited about increasing the revenue?

• An Objective Key Result (OKR). It's a goal-setting technique. You can use Key Result to express an expected change in the Nort Star Metric. But it is important not to confuse these terms.

• A strategy. A strategy is a cohesive set of choices, such as a Value Proposition, that reinforce one another and enable you to succeed in your chosen playing field. Your North Star Metric must align with your strategy. Choosing the right NSM is a strategic choice.

——

3. Recommended Classification

I've come across various attempts to classify North Star Metrics. The best one I've found was proposed by Amplitude. Depending on the game you are playing, you want to focus on:

• Attention: How much time do your customers want to spend using your product? The time and recurrent use of a product can indicate the value people derive from it.

• Transaction: How many transactions do your customers make in your product? Your goal is to help customers find the right product quickly and easily.

• Productivity: How efficiently and effectively can someone do their work? Your goal is to help customers with specific tasks.

Identifying the game you are playing is the first step toward finding your North Star Metric.

——

Hope that helps.

What are your thoughts?

——

P.S. You can download a free The North Star Framework 101 (13 pages, PDF) by subscribing to my newsletter: theproductcompass.tech/…

More about Amplitude's classification: amplitude.com/books/nor…