Growth Hacking

5 steps to find your “North Star Metric”

As previously explained, finding your North Star Metric can help you and your startup find the right focus and goal to stay on track. It’s also the key to long term growth. But how do you find your North Star Metric? Here are five steps to help you out.

1. Your NSM is the succes of the customer

Pleasing the customer is key for this metric. Your product or software is helping your client with a certain problem, and you want to measure how good of a job you’re doing. Airbnb want their clients easily book a night. Spotify ables its users to listen to the biggest collection of online music. Your NSM will be somewhere in this core mission.

2. Your NSM expresses the value for the customers

With a good North Star Metric, you still have to keep an eye on the other metrics as well. Don’t forget retention and referrals, but don’t just focus on your marketing KPI’s as well. The answer is somewhere in the middle. “placed orders” for example, is way too marketing-specific, and says nothing about client satisfaction. Your client might not like the order, so focussing on this one metric might lead you down the wrong path. A good NSM would be “delivered packages without complaints”. This metric is perfectly balanced between customer satisfaction that is still measurable.

3. The NSM is measurable

Talking about measurable: “satisfaction” is not something you can measure. Make sure your NSM is something you can see: number of times an order is placed, amount of minutes someone used your service.

4. The NSM is timebound and within your control.

Don’t choose an all-time metric. “Total subscriptions” will give you a false idea of growth, and the realisation that the ship is sinking will come too late. Choose a number that updates frequently, not even yearly. It’s also about you and the customer, so pick a number that’s not a subject to external factors. “amount of booked holidays/month” for a travel organization would be a bad idea, as you can’t control the weather, delays, locals, …

5. The NSM is a direct reflection of your growth.

This might be the most important rule, which makes the NSM a metric to worship. Make it undeniable, make it absolute. If the number is going down, so is your startup. Make sure you have no excuses. It should be impossible to say “yes, but…”. 

If you choose “amount of time my software is downloaded” as your NSM, you might be happy with the results. But what if people keep downloading it, because the download just keeps failing? You have no way to track this whatsoever, so it makes for a pretty shitty North Star Metric.

Hopefully these steps help you to find your North Start Metric. Once you have it figured out, you can prove your growth to employees and investors. Time to grow!