North Star Metric

North Star helps teams see the overall result, but one metric is no substitute for strategy and economics: Choose the value you see, check the relationship with retention and revenue, and keep guardrails nearby so that growth doesn’t mask quality deterioration.

What is North Star Metric and why is it necessary?

Definition

North Star Metric (NSM) is a key metric that shows user value and is directly related to business growth, and it’s not just a beautiful metric, it’s a rigorous benchmark that guides development decisions.

Example

For Spotify, that’s the total number of minutes a user listens to music per week, and if the goal is to grow the service without artificially adding up accounts or sessions, the NSM captures the essence of how much they actually listen.

How to Choose North Star Metric

Signs of the Right Metric

Classic NSM:

• It reflects the value of the product to the user, not just the activity.
• It is directly correlated with the financial result (LTV, income).
• Focusing the team rather than focusing on metrics

Mistakes and anti-patterns

Activity over value: if you count just registration or DAU, you can increase the number of users without improving their experience. These metrics quickly “twisted up”, but the product does not create real value.

The NSM you choose should not be a purely technical, marketing or vanity metric (just a nice number).

Case.

For Airbnb, it is wrong to choose the number of new ads as North Star: this does not reflect the main value; it is better to choose the number of nights booked by guests, because it measures the actual demand of the platform.

How NSM Helps to Shape Strategy

Application in strategic sessions

When there is a controversial idea or initiative from the team, compare their contribution to the NSM. If the product hypothesis does not affect or even reduces the NSM, then it is eliminated.

Prioritization and focus

NSM becomes a filter for features: does it improve the value of the main value, does it help the user to get more value?

Case: SaaS plans new integrations, and focusing on the number of active teams using key scenarios each week quickly estimates that any action (such as automation) should raise that number, not “the number of new registrations.”

NSM Connection to Metrics System and Product Management

How to connect NSM to submetrics

In normal practice, NSM aggregates submetrics: for example, if the basis is engaged users per week, then it is important how retention, frequency, engagement change.

All submetrics are subordinated to one goal: not everything should grow, but what really affects the NSM, which eliminates excessive reporting and the “metric zoo”.

NSM and OKR Products

NSM often becomes the core of product OKRs – Objective is formulated around NSM growth, and Key Results is formulated through submetrics and projects that contribute the most.

North Star Metric Examples for Different Types of Products

Classical formulas

• SaaS: Number of active paying teams per month
• Marketplace: successful transactions in a week
• Media/Content: Minutes of unique viewing in a week or a month
• E-commerce: Number of repeat purchases or orders sent per week

What to target

You take a high-value segment of users, you define the action they come back for, you look at how it relates to the business economy, if it all fits together, it’s a candidate for NSM.

FAQ

How do you know if you have the right NSM?

If NSM growth always results in a marked improvement in a key business metric (such as revenue or LTV) and user value, the metric is right.

How often should I change the NSM?

NSM is changed when a product radically changes a segment, strategy or business model.

Can a product have multiple North Star Metrics?

Normally not. NSM should be one, at most one for each radically separate product.

What is the difference between NSM and vanity metrics?

Vanity metrics are beautiful, but they don’t reflect real value, and NSM is directly related to user value and money or monetization potential.

Where to look for benchmarks on NSM?

Open research companies (for example, Amplitude, Mixpanel), startup accelerator cases, product blogs.

Does NSM replace other product and business metrics?

No. It sets the main vector, and the other metrics show the parts, the segments, the processes.