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Process: How to Define Your North Star Metric
Step 1: Identify the main metric
Identifying your North Star Metric should begin with a thorough analysis of your business. Start by identifying the key success factors specific to your industry. Then prioritize the KPIs that best measure these factors.
The key is finding an encompassing metric that reflects these priority KPIs by studying output metrics and input metrics.
For example, for a streaming platform, user engagement time could be the perfect North Star Metric, encompassing KPIs like:
- Number of new sign-ups
- The retention rate
- Usage frequency
This approach allows you to focus on one thing that truly captures the essence of the value you bring to your customers.
Step 2: Break down the NSM into actionable sub-metrics
Once identified, it's important to make it operational throughout the organization. Define OKRs (Objectives and Key Results) based on the NSM for each team.
These OKRs, more specifically OMTMs (One Metric That Matters), must be directly linked to improving the North Star Metric.
Make sure each OMTM is:
- Actionable by the relevant team
- Precisely measurable
- Directly linked to improving the North Star
For example, if your NSM is retention rate, an OKR could be "Increase user engagement by 10% by developing new features based on customer feedback."
Step 3: Steer with the North Star
Steering your project with the NSM requires constant monitoring and continuous adaptation. Set up a regular tracking system, ideally weekly, to measure performance against your NSM.
Ensure strategic alignment by prioritizing projects and initiatives that directly contribute to improving the NSM. This may involve:
- Reallocating resources to high-impact NSM projects
- Adjusting processes to better support NSM improvement
- Training teams to understand and act on the NSM
Stay flexible and ready to adjust your NSM if necessary. Markets evolve, priorities change, and your NSM must reflect these changes to remain relevant and effective.
By following these steps, you'll create a North Star Metric that not only guides your growth but also ensures the entire organization works in concert toward a common, measurable goal.
The NSM – OKR – KPI Pyramid
The NSM – OKR – KPI pyramid is a powerful structural model that organizes actionable data across different time horizons. This approach enables better coordination and more effective alignment of efforts throughout the organization.
At the top of the pyramid sits the North Star Metric (NSM), representing the company's long-term overall objective. It guides the entire strategy and operations.
In the middle are the OKRs (Objectives and Key Results), which break down into two categories:
- Strategic OKRs: Defined by the leadership team, they establish the company's major directions.
- Tactical OKRs: Developed by operational teams, they translate strategic objectives into actions.
For example, a strategic OKR might be "Grow the user base by 20% in 6 months," while an associated tactical OKR would be "Launch a targeted social media marketing campaign reaching 1 million views."
At the base of the pyramid are the KPIs (Key Performance Indicators). These specific, measurable metrics are used to track daily or weekly progress.
One aspect of this pyramid is the mutual influence between its levels. KPI results directly feed into OKRs, which in turn influence progress toward the NSM. Conversely, the NSM guides OKR definition, which determines the KPIs to track.
This pyramidal structure enables a coherent and integrated approach to performance management. It ensures that every action, from operational to strategic level, contributes to achieving the overall objective defined by the North Star Metric.
By adopting this model, companies can create powerful alignment between their long-term vision, medium-term objectives, and daily actions, fostering better growth.
How a North Star Metric Can Help Your Business Grow
Better focus on customer value
The North Star Metric (NSM) acts as a compass, guiding you toward what truly matters: the value you bring to your customers. It's like a lighthouse in the night, illuminating the path to customer satisfaction and growth.
In practice, your NSM helps you:
- Understand what your customers value most and their real needs
- Constantly measure this value
- Improve your offering based on these measurements
Take the example of a fitness app. Its North Star Metric could be "number of workout sessions completed per week." This KPI directly reflects the value users derive from the app.
The numbers speak for themselves: customer-centric companies see their revenue increase by 60% on average. It's like having a growth superpower at your disposal!
Better vision
Adopting an NSM is like planting a tree: the results aren't immediate, but over time it becomes strong and robust. This approach helps you think beyond quick wins and build something lasting.
Concretely, a long-term vision guided by your North Star Metric involves:
- Anticipating future trends in your market
- Investing in innovations that support your North Star Metric
- Making bold choices that will bear fruit over time
The statistics are impressive: companies that adopt this long-term vision are 50% more likely to outperform their competitors. It's like having a head start in a long-distance race.
Better team alignment
Imagine your North Star Metric as a polar star: everyone in your company can see it and head toward it. This creates a clear, common objective for all your teams. Every company defines its own North Star Metric and aligns all teams around it, ensuring consistency in efforts and priorities.
In practice, this alignment translates into more productive meetings, better collaboration between departments, and faster, more informed decisions.
The result? Companies that achieve this alignment see their performance improve by 19% on average. It's as if your entire company is rowing in the same direction, with increased efficiency.
Better efficiency
Your North Star Metric becomes your main dashboard, allowing you to see at a glance whether you're on the right track. It's like having a GPS guiding you to your destination.
To effectively use your North Star Metric as a measurement tool:
- Regularly track its evolution
- Analyze what influences its progression
- Adjust your strategies accordingly
Companies that align their actions with their North Star Metric see a 25% improvement in productivity. It's like gaining an extra workday each week, boosting your overall efficiency.
By integrating a North Star Metric into your strategy, you create a clear thread for all your decisions. It's your treasure map for growth, showing you where to go and how to get there most effectively.
Conclusion
The North Star Metric positions itself as an essential indicator for effectively managing a project, company, or product. It guides the organization toward its development and long-term success goals.
It provides a way to quantify the value of the project or product for its target audience. For example, it allows you to evaluate the effect of new features on user involvement, providing useful information for continuous improvement.
As a strategic guidance tool, it plays a central role in determining company priorities. It helps focus efforts and resources on initiatives that most directly contribute to improving this main KPI.
Finally, it is fundamental for defining objectives in the short and long term for the organization. It offers a precise framework for prioritizing projects and investments, ensuring that every action taken aligns the company on its optimal development trajectory.
In summary, the North Star Metric serves as a strategic reference, guiding every decision and action toward creating value for customers and the company's sustainable development.
FAQ: North Star Metric
How does reading a North Star Metric help measure growth?
Reading an NSM shows whether the company is creating value for its customers, by tracking a key activity (e.g., time spent on a social network) that drives sustainable growth (src: Sean Ellis, 2026).
How does a person integrate the NSM into their growth hacking tasks?
A person, like a growth hacker, uses the NSM to prioritize growth hacking tasks (e.g., A/B testing, social media campaigns) by aligning each action with the key metric to maximize customer interest.
Which services or products benefit most from an NSM?
A multitude of services and products benefit: e-commerce (monthly sales), streaming apps (hours watched), or SaaS (active usage). Ex: Shopify tracks merchant sales (src: Shopify, 2026).
How does an NSM display in company dashboards?
Dashboards highlight the NSM (e.g., number of products sold) to provide a clear view of performance, helping founders and teams track key activity in real time.
What method for establishing a list of potential NSMs?
The method involves identifying user actions linked to value (e.g., customer service calls for a SaaS, interactions on a social network), then selecting the one that reflects growth and customer interest.
Why avoid a multitude of metrics in favor of a single NSM?
A single NSM avoids confusion from a multitude of KPIs, aligning teams on essential things for growth (e.g., bookings for an accommodation service like Airbnb).
How does a social network define a relevant NSM?
A social network chooses an NSM like number of posts or engagement time, reflecting user interest and guiding improvements (e.g., optimized algorithms for more activity).
