✔️Checklist for your North Star Metric

In most organizations, teams track multiple metrics - some more important and some less. But if you ask teams to name just one metric that could become the gatekeeper for business and customer value, it is hard to point out which one.

While today, we will not be focusing on how to select a North Star (maybe I will save it for a future post), we will be going through a checklist for product and business leaders to go through.. to find or validate whether your chosen single most important metric (i.e North Star) is indeed a good candidate.

1/ If you accomplish the North Star, you ace your Vision & Strategy

2/ Adds value to your customer

3/ It is measurable and actionable

4/ It is leading and gives early signals

5/ Cannot be gamed

Let us go into each of these. But before we start, do not forget to subscribe to Productify:

If you accomplish the North Star, you ace your Vision & Strategy

Your North star metric should be reflective of company’s Vision and strategy, and not disconnected from it. For example, Walmart’s Vision is to “Be THE destination for customers to save money, no matter how they want to shop.” and the North Star Metric is purchases per customer session.

If Walmart is able to move this metric up, it is reflective of two factors: customer loyalty (hence.. Walmart is THE destination..) and saving money (through their low price deals) - both relevant for the vision of the company.

Adds value to your customer

The North Star metric should also help you add value to customers and not only your organizational vision.

For example, the Zoom (Video Conferencing company) vision is “Video communications empowering people to accomplish more” and it is reflective of how they want to impact customer’s lives.

If customer value was not key to Zoom, they would have had North Star Metrics like ‘ more zoom meetings’ or ‘more signups’ , but instead they chose North Star Metric as ‘ Weekly hosted meetings’ which focuses on how many meetings per week customers host. If customers really value Zoom and they find usefulness out of it, they would host more meetings in a week’s time (a typical office week).

It is measurable and actionable

Unactionable North Star is like a unicorn, its a myth.

You really have to give a North Star to the teams that they can measure - which means know benchmarks and understand how it moves, and also that they can action upon - that is do changes to product such that it moves the metric.

For example, if you set North Star as ‘number of returning customers after Month+1 and Month+6’ but your data funnels are not setup to track individual customers (due to repetitions, duplicates or data being spread across systems) , then your teams will fail to understand or move the metric.

Another example, let us say your North Star Metric is ‘more conversions at checkout’ but the >80% of times have nothing to do with checkout process, it becomes an unactionable metric. Choose a metric that makes sense for all teams and they can action upon it.

It is leading and gives early signals

North Star is a leading metric and not lagging - which means it gives the organization an early sign of whether company is going in right direction or not.

Example: ‘Revenue per week’ as a metric sounds like a obvious metric to track but if the metric goes up or down, it is the final outcome of so many things that might have gone right or wrong in the organization. It is better to break down revenue into its multiple parts such as acquisition, retention and monetization metrics and then track one of them , so that you’re aware about early signs.

In the zoom example, if the North Star Metric ‘Weekly Hosted Meetings’ goes down , it is reflective of so many things - it may mean the tool is no more as valuable which could be because of lower signups, churn or just lower usage. If you fix the symptoms, then the ‘weekly hosted meetings’ could be back on track. And ‘Weekly Hosted Meetings’ is indicative of future potential revenue (which is lagging)

Cannot be gamed

Although an obvious one, but it can be easy to miss. Often metrics maybe chosen in a way that it maybe easy for teams to game it. Example if your North Star Metric is ‘more weekly signups’ , the teams could move the signup button the front-page and make it bigger in size or the only point of focus on the website or mobile app.

This may lead to artificial increase in North Star Metric, without giving true value to customers or helping meet business vision and strategy.

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