Whether start-up, SME or large corporate – growth is more than ever the central focus. But how do you not get confused with all the growth strategies? How do you not lose focus here? The North Star Metric helps align your business. Learn how to find your own North Star Metric, focus on it, and ensure sustainable growth here.
Why? What is the North Star Metric?
Among all the growth strategies, it’s easy to lose sight of the big picture. For this reason, it is important to keep an eye on the essentials: What is the north of your company? In which direction should it go, where does your compass point? To stay on course, it helps to literally follow the North Star. All other growth strategies align to this one metric.
What triggers that magical “aha” moment for a buyer, customer or user at your company? What really drives their growth?
What is the composition of a North Star Metric?
North Star Metric, or NSM, helps companies focus fully on growth. NSM translates the value generated for customers into a measurable metric. This serves as a guiding light, a north star, for the management of the company and thus promotes long-term customer growth.
The conclusion is: added value for your customers inevitably results in growth for your company. Because the more satisfied your users are, the more likely they are to recommend your product to others and thus recruit new users. This dynamic is to be made measurable by the NSM.
This can also be observed in the following companies:
Famous examples of a North Star Metric
- Spotify
Time spent listening to content - AirBnB
Number of nights booked - Facebook
Monthly active users - WhatsApp
Number of messages that have been sent - Amazon
Number of purchases per month
What is NOT a North Star Metric?
The North Star Metric depends on the main application of your product. The Medium.com platform is all about reading and generating content. The NSM that the company has selected is the total reading time. Depending on the goal, a company is managed differently: the effects differ depending on which NSM is chosen.
If Medium focused instead on the number of new members per month, there would be a priority shift: instead of focusing on bringing more content to the site, it would be all about growing the userbase. This would lead to the company acting like any other social network and losing its USP.
What are the advantages?
By breaking down the company’s goals into a single metric, it becomes possible for everyone in the company to pull together as they share the same goal: to increase the North Star Metric.
The value delivered to customers is most concretely captured by the NSM. Clarity is thus created within the company: Tasks and goals are clearly defined. By aligning all of the company’s activities with the NSM, you can ensure that everyone is working toward the same goal.
The North Star Metric has become one of the most important KPIs in the “metrics sky” against which all marketing and sales efforts should be aligned.
Here’s to good growth,
Stefan Greunz
