North Star Metrics
A North Star Metric is a single, focused measurement that reflects the core value your product delivers to customers while indicating business health and potential for growth.
Unlike traditional business metrics that might focus solely on revenue or user counts, an effective North Star Metric sits at the intersection of customer value and business success. It serves as a strategic compass, helping teams make consistent decisions and prioritise efforts that drive sustainable growth.
More than just another KPI
The Fundamental Nature of North Star Metrics
Sean Ellis, who popularised the term "growth hacking," describes the North Star Metric as "the specific metric that best captures the core value that your product delivers to customers." This definition highlights the essential duality of an effective NSM: it must reflect both customer value and business health.
The Crucial Difference: North Star vs. Vanity Metrics
Vanity metrics like registered users or downloads might show large numbers but often mask underlying problems with engagement or retention.
A genuine North Star Metric directly connects to sustainable value creation. It tracks an action or outcome that represents real value for customers and correlates with long-term business success. When users engage with your product in the way captured by your North Star, both they and your business benefit.
Defining Your North Star Metric: A Systematic Approach
The North Star Workshop: Bringing Structure to the Process
Developing an effective North Star Metric requires structured thinking and collaborative input. The North Star Workshop provides a framework for guiding this process, bringing together cross-functional perspectives to identify the metric that truly represents your product's value.
Workshop Preparation
Before the workshop, take these essential preparation steps:
- Assemble the right team. Include representatives from product, engineering, data, marketing, customer success, and executive leadership. The diversity of perspectives is crucial.
- Gather relevant data. Prepare cohort analyses showing retention patterns, revenue correlations, and user behaviour data. Having this data available will ground the discussion in reality.
- Collect customer insights. Gather qualitative feedback from customers about the value they receive from your product and why they continue using it.
- Prepare initial hypotheses. Have team members think independently about potential North Star candidates before the workshop to foster productive discussion.
Framework: The Five Criteria for Effective North Star Metrics
When evaluating potential North Star Metrics, apply these five essential criteria:
1. Value Representation
The metric must capture real value delivery to customers. Ask: Does this metric reflect an action where customers receive genuine value? If this metric increases, does it mean customers are getting more of what they came for?
2. Business Alignment
The metric should correlate with business success. Consider: Does sustainable growth in this metric lead to business growth? Can we establish a causal link between this metric and revenue or other business outcomes?
3. Responsiveness to Action
Teams need to be able to influence the metric through their work. Evaluate: Can multiple teams affect this metric through their decisions and actions? Will improvements show up in this metric within a reasonable timeframe?
4. Understandability
Everyone in the organization should grasp what the metric means. Ask: Can you explain this metric to new employees in a sentence? Would people across different functions understand what drives this metric?
5. Leading Indicator Quality
The metric should predict future outcomes rather than just reflect past performance: Does movement in this metric precede changes in retention, revenue, or other business outcomes? Can early changes in this metric help forecast long-term business performance?
Case Study: Netflix's Evolution of North Star Metrics
Netflix provides an illuminating example of how North Star Metrics can evolve as business models and value propositions change.
In its early DVD-by-mail days, Netflix's North Star Metric was "DVD Turns Per Month"—how quickly customers watched and returned DVDs to get new ones. This metric perfectly balanced customer value (watching more content) with business efficiency (maximizing the use of their DVD inventory).
As Netflix transitioned to streaming, they initially focused on "Hours Watched Per Subscriber" as their North Star. This captured the core value of unlimited viewing that drove their early streaming growth. However, as competition intensified and content costs rose, Netflix recognized that not all viewing hours were equal.
Their North Star evolved to "28-Day Retention After First Stream," recognising that getting new users to find content they love quickly was critical for reducing churn. Today, while Netflix doesn't publicly disclose their exact North Star, analysis suggests they focus on metrics that balance engagement quality with quantity, likely involving a combination of retention and the depth of content catalogue exploration.
This evolution illustrates how a North Star Metric must adapt as your business model and competitive landscape change, while still maintaining focus on the core value exchange with customers.
Secondary Metrics: Building a Balanced Framework
The Importance of Supporting Metrics
While the North Star Metric provides focus, relying on a single metric can create blind spots. A well-designed set of secondary metrics provides necessary context and helps diagnose issues affecting your North Star.
Think of these metrics as forming a constellation around your North Star—they add dimension to your understanding while still allowing the North Star to guide overall direction.
The Four Types of Secondary Metrics
An effective secondary metric framework typically includes four types of measurements:
1. Input Metrics
These metrics track the actions and behaviours that directly drive your North Star. For example, if your North Star is "Weekly Transacting Users," input metrics might include "New User Acquisition" and "Push Notification Open Rate." If your North Star is "Content Submissions," input metrics might include "New Creator Onboarding" and "Creation Tool Usage."
Input metrics help teams understand the specific levers they can pull to influence the North Star.
2. Guardrail Metrics
These metrics ensure you're growing the North Star in a healthy, sustainable way. They might include cost-related metrics like Customer Acquisition Cost or Cost Per Transaction, quality metrics like Error Rates or Customer Satisfaction, and ethical metrics like Privacy Compliance or Content Safety Measures.
Guardrail metrics prevent teams from gaming the North Star at the expense of long-term health.
3. Outcome Metrics
These metrics track the business results that should follow from growth in your North Star. These include revenue metrics like Monthly Recurring Revenue or Average Revenue Per User, business health metrics like Customer Lifetime Value or Gross Margin, and growth metrics like Market Share or New Market Entry Success.
Outcome metrics validate that your North Star is indeed driving business success.
4. Balancing Metrics
These metrics monitor areas that might be unintentionally neglected when focusing on the North Star. If optimizing for speed, include quality metrics. If focusing on new customer acquisition, track existing customer satisfaction. If emphasizing volume, measure depth of engagement.
Balancing metrics ensure a holistic approach to growth.
Case Study: Spotify's Metric Framework
Spotify's metric framework provides an excellent example of a North Star supported by thoughtfully designed secondary metrics.
While Spotify doesn't publicly confirm their exact North Star, analysis suggests it's "Time Spent Per Active User"—a metric that captures how deeply users engage with the platform.
Their supporting metric framework includes input metrics like playlist creation and following (which drives discovery), search quality (which helps users find relevant content), and personalization algorithm effectiveness (which improves recommendations).
For guardrail metrics, they track artist compensation (ensuring ecosystem health), technical quality metrics (like buffering rates and app crashes), and content diversity measures (preventing filter bubbles).
Their outcome metrics include subscription conversion rate, premium subscriber retention, and average revenue per user.
As balancing metrics, they monitor new artist discovery (ensuring the platform doesn't just promote established artists), social sharing (promoting network growth), and cross-device usage (ensuring platform value across contexts).
This comprehensive framework ensures that while Spotify focuses on maximizing engagement (their North Star), they do so in ways that balance user experience, artist needs, and business outcomes.
Common Pitfalls and Antipatterns in North Star Implementation
The Seven Deadly Sins of North Star Metrics
Even with good intentions, organizations often fall into these common traps:
1. The Vanity Trap
Choosing metrics that look impressive but don't reflect real value, like registered users or downloads, constitutes the vanity trap. For example, a media company focused on "Total Content Views" without considering depth of engagement, leading to clickbait content that actually reduced long-term retention. The solution is to always validate metrics against retention and revenue data to ensure they represent sustainable value.
2. The Compromise Metric
The compromise trap involves choosing an overly complex or composite metric to satisfy different stakeholders rather than making a clear choice. A B2B software company created a custom "Engagement Score" combining 12 different factors, resulting in a metric so complex that teams couldn't understand how to influence it. The solution is to force the hard decision—pick the single metric that best represents your core value, then use secondary metrics to provide context.
3. The Immovable Mountain
Selecting a North Star that teams can't meaningfully influence in the short to medium term leads to the immovable mountain problem. An enterprise software company chose "Customer ROI" as their North Star, but teams couldn't see impact on this metric until 12-18 months after making changes. The solution is to ensure your North Star balances long-term relevance with reasonable responsiveness to team actions.
4. The Misaligned Incentive
A North Star that drives behaviours contrary to long-term business health or customer interests creates misaligned incentives. A marketplace platform focused on "Transaction Volume," incentivizing teams to allow low-quality listings that boosted short-term numbers but damaged trust. The solution is to implement guardrail metrics that ensure North Star growth happens in a healthy, sustainable way.
5. The Rigid Fixation
Refusing to evolve the North Star as business models or market conditions change creates a rigid fixation. A subscription box company continued to focus on "New Box Signups" even as their business model shifted toward retained subscribers and cross-selling. The solution is to review your North Star annually or during major strategic shifts to ensure continued relevance.
6. The Neglected Constellation
Focusing exclusively on the North Star without developing supporting metrics to provide context and balance creates a neglected constellation. A social platform focused solely on "Daily Active Users," leading teams to drive notification spam that boosted short-term usage but increased long-term abandonment. The solution is to develop a comprehensive framework of secondary metrics covering inputs, guardrails, outcomes, and balance.
7. The Measurement Mirage
Selecting a theoretically perfect North Star that can't be measured reliably with available data creates a measurement mirage. A healthcare app chose "Improvement in Patient Outcomes" as their North Star but had no reliable way to measure this across their user base. The solution is to balance aspiration with pragmatism—ensure your North Star is consistently measurable before implementing it.
Case Study: The North Star Evolution at Zoom
Zoom's journey with North Star Metrics illustrates both challenges and successful adaptation.
In their early days, Zoom focused on "Number of Meetings Hosted" as their primary growth metric. This served them well during their initial growth phase, driving feature development focused on making meeting creation and hosting as frictionless as possible.
However, as they scaled, they began to notice limitations with this metric. It didn't distinguish between high-value enterprise meetings and brief personal check-ins. It also didn't capture the experience quality that differentiated Zoom from competitors.
Around 2018, Zoom evolved their approach to focus on "Weekly Hosted Meeting Minutes" with a crucial qualifier: meetings with three or more participants. This refined North Star better captured their core value proposition—enabling reliable, high-quality group communication—while still providing a clear growth metric.
They supported this with key secondary metrics including Meeting Net Promoter Score (a quality guardrail), Host Retention Rate (an outcome metric), Meeting Join Success Rate (a technical quality metric), and Enterprise Account Expansion (a business outcome metric).
This evolving approach helped Zoom maintain product focus through their explosive growth during the COVID-19 pandemic, when their daily meeting participants increased from 10 million to over 300 million in just a few months.
Running an Effective North Star Metric Workshop
Detailed Workshop Plan
Here's a comprehensive plan for running a successful North Star Workshop:
Pre-Workshop Preparation
Timing this 1-2 weeks before the workshop, start by distributing pre-reading materials on North Star concepts. Have participants complete a pre-workshop survey asking what they believe customers value most about your product, what metrics they currently use to measure success, and what they would consider your North Star if they had to choose today.
Prepare data packets with current top-level metrics with 12-24 month trends, cohort retention analysis, correlation data between different metrics and business outcomes, and customer feedback themes and quotes.
Workshop Day 1: Value Discovery (3 hours)
Start with a value definition session lasting about 60 minutes. Begin with introduction and goal setting. Continue with a value proposition canvas exercise asking what specific problems you solve, what positive outcomes you create, and what would make customers stop using your product. Complete this session with customer journey mapping to identify key moments where customers experience value, note where customers demonstrate commitment, and highlight moments of potential disappointment.
Next, conduct a behaviour analysis session for 60 minutes. Identify key customer behaviours that indicate value received. For each behaviour, discuss whether it is repeated by satisfied customers, if it correlates with retention, and if you can influence this behaviour directly. Prioritise behaviours based on value indication strength.
Finish the day with a metric exploration session lasting 60 minutes. For each key behaviour, brainstorm potential metrics. Evaluate each metric against the five criteria: value representation, business alignment, responsiveness to action, understandability, and leading indicator quality. Narrow to 3-5 candidate North Star Metrics for further analysis.
Workshop Day 2: Evaluation and Selection (3 hours)
Begin with a data validation session for 60 minutes. Review historical data for each candidate metric. Examine correlations with business outcomes. Discuss measurement feasibility and reliability. Identify potential blind spots or gaming risks.
Continue with an input mapping session for another 60 minutes. For each candidate, identify key inputs that drive it. Map which teams can influence these inputs. Assess how directly teams can impact the metric. Discuss timeframes for seeing impact from actions.
Conclude with a decision and next steps session for 60 minutes. Conduct a final evaluation of candidates against criteria. Use a structured decision process involving individual voting, discussion of top contenders, and final selection or identification of needed follow-up. Define next steps including data validation requirements, secondary metric development, communication planning, and implementation timeline.
Post-Workshop Follow-Up
Within one week of the workshop, distribute the workshop summary and decisions. Complete any required data validation. Develop an initial dashboard for the North Star. Begin developing the secondary metrics framework. Draft a communication plan for organizational rollout.
Facilitation Best Practices
Successfully guiding a North Star Workshop requires careful facilitation. Here are key practices:
Managing Group Dynamics
Use structured turn-taking for initial input to prevent domination by senior voices. Employ anonymous idea submission for sensitive discussions about metric limitations. Create cross-functional breakout groups to build shared understanding. Use dot voting to quickly gauge consensus and identify areas needing deeper discussion.
Data-Informed but Not Data-Limited
Balance quantitative data with qualitative customer insights. When data is incomplete, acknowledge it but don't let it paralyze decision-making. Use "if we knew X, what would it tell us?" to identify critical knowledge gaps. Remember that some valuable metrics may require new instrumentation—don't limit yourself to currently measured data.
Building Commitment
Focus on understanding before advocacy—ensure everyone comprehends each option. Explicitly discuss trade-offs rather than pretending perfect solutions exist. Capture concerns about chosen metrics for inclusion in the supporting metric framework. End with clear commitments to action and ownership.
Characteristics of Successful North Star Metrics
Patterns From High-Performing Organisations
Organisations that successfully implement North Star frameworks typically share these characteristics in their approach:
First, they maintain value-centric definition. Their North Star Metrics genuinely reflect the core value exchange with customers. The metric captures an action or outcome where customers receive their desired value. Growth in the metric indicates more value delivery, not just more activity. The metric aligns with the fundamental reason customers use the product.
Second, they ensure business model alignment. Their North Star connects directly to how the business creates and captures value. The metric has a clear, demonstrable relationship with revenue drivers. It reflects the economics of the business model (subscription, transaction, etc.). Growth in the metric translates to sustainable business growth.
Third, they create organisational focus. Their North Star provides clear direction for the entire organisation. Teams across functions understand how they contribute to the metric. The metric helps resolve prioritisation conflicts and resource allocations. It creates a shared language for discussing progress and challenges.
Fourth, they balance adaptability with consistency. Their North Star approach balances stability with evolution. The core metric remains consistent enough to drive long-term focus. Secondary metrics evolve to address emerging opportunities and challenges. The framework adapts to major business model or market changes while maintaining continuity.
Case Study: Etsy's North Star Approach
Etsy provides an excellent example of successful North Star implementation. Their North Star Metric is "Gross Merchandise Sales" (GMS)—the total value of items sold through their platform.
This metric succeeds because it perfectly captures the three-sided marketplace Etsy operates. For buyers, increasing GMS means they're finding more items they value. For sellers, it represents direct economic opportunity. For Etsy's business model, it aligns with their revenue structure (percentage of sales).
What makes Etsy's approach particularly effective is their comprehensive supporting metric framework. Their input metrics include active buyer growth, purchase frequency, search-to-purchase conversion, and new seller activation.
Their guardrail metrics encompass customer satisfaction, seller economic success rate (percentage of sellers earning above threshold amounts), and platform trust indicators (review quality, resolution rates).
Their outcome metrics track take rate (Etsy's percentage of GMS), seller services revenue (additional services beyond the basic marketplace), and international GMS percentage.
When Etsy faced challenges in 2017-2018, this framework helped them identify that while their North Star (GMS) was growing, underlying health metrics were weakening. This led to a strategic reset focusing on buyer retention and search quality that revitalized their growth.
Their North Star approach has helped Etsy grow GMS from $3.25 billion in 2018 to over $13.5 billion by 2022, while maintaining marketplace health and differentiation.
Balancing Leading and Lagging Indicators
A sophisticated North Star approach recognizes the tension between leading indicators (which change quickly) and lagging indicators (which reflect long-term outcomes). This requires understanding the measurement time horizon.
Different metrics operate on different timescales. Immediate indicators like user actions and conversion rates operate in terms of hours or days. Short-term indicators such as engagement patterns and initial retention function on a scale of weeks. Medium-term indicators including sustained usage and monetization require months to fully manifest. Long-term indicators like retention and lifetime value may take quarters or years to fully emerge.
An effective framework includes metrics across these horizons, with the North Star typically positioned as a medium-term indicator—responsive enough to guide action but stable enough to drive consistent focus.
Advanced implementations often develop predictive analytics approaches connecting leading indicators to the North Star. Identify early behaviors that predict later North Star contribution. Develop scoring models that predict customer lifetime value. Create leading indicators that provide early warning of North Star changes. Use machine learning to identify complex patterns affecting the North Star.
Conclusion:
Organisations that successfully implement North Star frameworks typically see several transformative benefits:
- Gain strategic clarity. Decisions become clearer when evaluated against a consistent definition of success.
- Achieve organisational alignment. Cross-functional teams develop a shared language and purpose.
- Create focused innovation. Experimentation becomes more directed and effective.
- Drive sustainable growth. Progress happens in ways that build long-term value rather than extracting short-term gains.
- Develop adaptive learning. The organization develops systematic ways to learn what creates value.
The North Star approach isn't just about measurement—it's about creating a shared understanding of what matters most. When implemented effectively, it becomes the foundation for building products and businesses that create lasting value for both customers and the organization.
The most successful companies don't just have North Star Metrics—they build entire cultures around understanding and delivering the value those metrics represent. By following the approaches outlined in this guide, you can begin your own journey toward metric-driven clarity and purpose.