North Star Metric: definition and marketing application

Managing a project or a company requires knowing precisely in which direction we are heading. It is necessary to identify what works or not and find levers to remedy it. To do this, it is impossible to rely on intuition or chance. Having precise and actionable data is therefore essential. The challenge still remains to distinguish those which are really useful. For this, the North Star Metric (NSM) is more than necessary.

North Star Metric: concept and definition

Like the North Star that points the way to navigators, the North Star Metric points a company towards its ultimate goal. This metric serves as a benchmark for its growth. It allows you to know the value attributed by its customers to the product or service it offers. Its mission is not to replace the management indicators of a company, but rather to direct them all towards a single main indicator. This helps to more simply define the long-term success of an organization.

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The North Star Metric has various advantages for a business. The first is definitely goal alignment. Although each team has different goals to achieve, having an NSM allows the whole organization to have a common goal. It also offers more transparency, because it gives the possibility of knowing more about the progress made by each one to achieve the said objective.

As this indicator is the most representative of the value provided to customers, it is also useful for continually improving the customer experience offered. This is an essential point to improve its income and develop its activity.

From a general point of view, the North Star Metric is therefore essential to guide decision-making within a company.

North Star Metric Marketing App

Several well-known companies apply the concept of North Star Metric to keep their main objective in sight. Each organization must find its own NSM.

North Star Metric Examples

In order to better understand the concept of North Star Metric, it is preferable to give some specific examples of firms having found their indicator in order to correctly measure their growth. Among them, Spotify. The metric the streaming service teams have aligned around is time spent listening to music. This ultimately makes sense, given that the company’s mission is to provide access to songs and other audio content. Concretely, this means that the more music users listen to on the platform, the better Spotify fulfills its role.

For micro-learning startup Grovo, the North Star Metric is instead the number of lessons completed by active users of the platform. For Zoom video conferencing software, this is the number of meetings a user hosts each week.

How to define your North Star Metric?

At first glance, finding your company’s North Star Metric may seem complex. In reality, it’s mostly about organization and common sense. To define it, you have to ask yourself the right questions:

  • What is the added value for my customers? ;
  • At what point in their journey is the customer taken for granted? ;
  • How long does it take to convert it?

The answers will give you basic measurement, click time, and conversion time. This is essential information to find your North Star Metric and succeed in better understanding your customers, but also designing levers to boost your income.

It is important to remember that the turnover should not be considered as the NSM to follow strictly speaking. The goal is to successfully identify a growth indicator. A web marketing agency can help you with this task.

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