Growth budget allocation
Acquiring ideal customers
Compounding growth loops
Results and expectations
A North Star metric (NSM) is a key performance indicator (KPI) that represents the core value a company delivers to its customers. It is a powerful tool for measuring a business’s success and aligning the entire company around a common goal. This article will explore 15 North Star metric examples across different industries and discuss their importance. So, let’s dive in!
What is a North Star Metric?
A North Star metric is the critical indicator that captures the true value a company provides to its customers. It represents the ultimate goal that the company strives to achieve. Unlike other metrics, this one focuses on the business’s long-term success and provides a holistic view of its performance.
For example, if you’re a social media platform, your North Star metric might be the number of daily active users or the average time spent. These metrics reflect the core value your platform delivers to users and can be used to drive growth and inform critical business decisions.
Identifying a North Star metric is crucial for businesses as it helps align teams towards a common goal and ensures everyone is working towards the same objective. It is a guiding light, providing clarity and direction in decision-making processes. By focusing on a single NSM, companies can avoid being too thin and concentrate on what truly matters for their success.
Moreover, a North Star metric is not static and may evolve as the business grows and customer needs change. Companies must regularly reassess their NSM to ensure it remains relevant and continues to drive value for both the business and its customers.
Why is a North Star Metric Important?
A North Star metric is vital because it provides clarity and focus to the entire organization. It aligns everyone around a common goal and helps prioritize initiatives that most impact business success.
A clear North Star metric enables teams to make data-driven decisions and ensures that efforts are concentrated on activities that drive the desired outcome. It also helps monitor progress and identify areas for improvement, leading to continuous growth and optimization.
Furthermore, this metric is a guiding light for strategic decision-making. By defining a single key metric that reflects the core value a company delivers to its customers, organizations can stay true to their mission and vision. This metric acts as a compass, guiding teams through complex challenges and keeping them on track toward long-term success.
Another benefit of a North Star metric is its ability to foster a culture of accountability and transparency within an organization. When everyone is focused on a common goal, it promotes collaboration and shared responsibility. Teams are more likely to work together towards achieving the NSM, leading to increased efficiency and effectiveness across the board.
North Star Metrics by Industry
Every industry has its unique set of challenges and goals. Therefore, it’s important to identify the most relevant North Star metric for your specific industry. Here are some examples of North Star metrics in different sectors:
SaaS North Star Metrics
For Software-as-a-Service (SaaS) companies, some common North Star metrics include Monthly Recurring Revenue (MRR), Customer Lifetime Value (CLTV), and Churn Rate. These metrics help measure the financial health of the business, customer engagement, and retention.
Regarding SaaS companies, Monthly Recurring Revenue (MRR) is a crucial metric because it reflects the predictable revenue stream generated from subscriptions. Customer Lifetime Value (CLTV) is another essential metric as it helps in understanding the long-term value of a customer to the business. Additionally, monitoring the Churn Rate is vital as it indicates the percentage of customers who stop using the service over a specific period.
E-Commerce North Star Metrics
In the e-commerce industry, North Star metrics such as Average Order Value (AOV), Customer Acquisition Cost (CAC), and Conversion Rate are often used. These metrics focus on revenue generation, customer acquisition, and the effectiveness of marketing campaigns.
In the e-commerce sector, Average Order Value (AOV) is a significant metric as it provides insights into the average amount customers spend in each transaction. Customer Acquisition Cost (CAC) is essential for understanding the resources required to acquire new customers, while Conversion Rate helps evaluate the effectiveness of converting website visitors into paying customers.
Tech North Star Metrics
Technology companies often track NSMs like Active Users, Session Duration, and App Downloads. These metrics provide insights into user engagement, product adoption, and market penetration.
Media North Star Metrics
In the media industry, metrics such as Daily Active Users (DAU), Content Consumption, and Ad Revenue are key North Star metrics. These metrics help measure user engagement, content quality, and monetization strategies.
15 Company North Star Metric Examples
Here are some examples of what well-known companies’ North Star metrics could be. These North Star examples showcase the metrics these companies prioritize and shed light on their growth strategies and the factors that contribute to their success.
| Company | North Star Metric |
|---|---|
| Netflix | Total Hours Viewed |
| Uber | Weekly Active Riders |
| Spotify | Monthly Active Users |
| Amazon | Gross Merchandise Volume (GMV) |
| Slack | Daily Active Users |
| Zoom | Meeting Minutes |
| Peloton | Monthly Subscriptions |
| Daily Active Users | |
| Searches per User | |
| Airbnb | Nights Booked |
| Daily Active Users | |
| Salesforce | Monthly Recurring Revenue (MRR) |
| Active Job Postings | |
| TikTok | Daily Active Users |
| Shopify | Gross Merchandise Volume (GMV) |
We will discuss each example in greater detail.
1. Netflix – Total Hours Viewed
Netflix’s North Star Metric is the total hours viewed, a critical indicator of the platform’s engagement and success. By measuring the cumulative viewing time, Netflix gains insights into the depth of user interaction with its content, informing its content strategy and marketing initiatives. This metric also aids in detecting viewer preferences and trends, enabling Netflix to refine its offerings and improve the overall streaming experience for its audience.
2. Uber – Weekly Active Riders
Uber measures the number of weekly active riders to gauge the adoption and usage of their ride-hailing service. This North Star metric helps Uber understand the demand for their service in different regions and optimize its driver allocation and pricing strategies. By monitoring this metric, Uber can identify patterns in rider behavior, such as peak usage times, and tailor their services accordingly to provide a seamless experience for riders and drivers.
3. Spotify – Monthly Active Users
The number of monthly active users is Spotify’s North Star metric, reflecting the popularity and reach of its music streaming service. Focusing on this metric allows Spotify to assess its market penetration and track user engagement. It also lets Spotify personalize recommendations and playlists based on user preferences, enhancing the overall user experience and encouraging long-term loyalty.
4. Amazon – Gross Merchandise Volume
Amazon focuses on the gross merchandise volume, representing the total value of products sold on their platform, as their North Star metric. This metric allows Amazon to evaluate its marketplace’s overall health and measure its seller ecosystem’s success. By monitoring this metric, Amazon can identify emerging product trends, optimize its inventory management, and enhance logistics capabilities to ensure timely deliveries and customer satisfaction.
5. Slack – Daily Active Users
Slack tracks the number of daily active users, indicating the level of collaboration and engagement on its messaging and collaboration platform. This metric helps Slack understand the effectiveness of its communication tools and the value they provide to teams. By analyzing this metric, Slack can identify user patterns, improve its platform’s features, and tailor its marketing efforts to attract and retain new users.
6. Zoom – Meeting Minutes
Zoom measures the total meeting minutes conducted on its video conferencing platform as its North Star metric, emphasizing the value of its service. This metric allows Zoom to assess the level of adoption and usage of its platform across different industries. By focusing on meeting minutes, Zoom can identify areas for improvement, such as enhancing video and audio quality, and develop new features to accommodate various user needs and preferences.
7. Peloton – Monthly Subscriptions
Peloton’s North Star metric is the number of monthly subscriptions, reflecting the growth and popularity of its interactive fitness platform. By tracking this metric, Peloton can evaluate the effectiveness of its content offerings, monitor user engagement, and identify opportunities to expand its user base. It lets users personalize workout recommendations and provide a seamless experience across their hardware and software platforms.
8. Facebook – Daily Active Users
Facebook uses the number of daily active users as its North Star metric, measuring the engagement and reach of its social media platform. This NSM helps Facebook understand user behavior, preferences, and trends, allowing it to optimize its content algorithms and advertising strategies. Facebook can also assess the impact of new features and updates on user engagement and satisfaction by focusing on daily active users.
9. Google – Searches per User
Google focuses on the average number of searches per user, demonstrating the level of user engagement and the effectiveness of their search engine. This North Star metric allows Google to refine its search algorithms, improve search result relevance, and enhance the overall search experience. By monitoring this metric, Google can also identify emerging search trends and user preferences, enabling it to deliver more personalized and targeted search results.
10. Airbnb – Nights Booked
The number of nights booked is Airbnb’s North Star metric, indicating the success and demand for its online marketplace for accommodations. By tracking this metric, Airbnb can assess the growth of its host community, evaluate the popularity of different destinations, and optimize its pricing and search algorithms. It also enables them to provide tailored recommendations to guests and hosts, enhancing the overall booking experience.
11. X (formerly known as “Twitter”) – Daily Active Users
X’s North Star metric is the number of daily active users, representing engagement and real-time conversations on their social media platform. This metric helps X understand user behavior, interests, and trending topics, allowing them to optimize their content algorithms and advertising strategies. By focusing on daily active users, X can also assess the impact of new features and updates on user engagement and satisfaction.
12. Salesforce – Monthly Recurring Revenue (MRR)
Salesforce focuses on MRR, measuring the financial stability and growth of its customer relationship management (CRM) software. This North Star metric allows Salesforce to evaluate the effectiveness of its sales and marketing strategies, monitor customer retention, and identify upsell and cross-sell opportunities. By tracking MRR, Salesforce can also assess the impact of new product releases and updates on customer satisfaction and overall revenue growth.
13. LinkedIn – Active Job Postings
The number of active job postings on LinkedIn serves as their North Star metric, indicating the level of engagement and adoption of their professional networking platform. By focusing on this metric, LinkedIn can assess the effectiveness of its job matching algorithms, evaluate the demand for different job categories, and optimize its user experience for both job seekers and recruiters. It also enables them to provide their users with personalized job recommendations and insights, enhancing their professional networking experience.
14. TikTok – Daily Active Users
TikTok measures the number of daily active users, reflecting the engagement and viral content consumption on its short-form video platform. This North Star metric helps TikTok understand user behavior, preferences, and trends, allowing it to optimize its content algorithms and advertising strategies. TikTok can also assess the impact of new features and updates on user engagement and satisfaction by focusing on daily active users.
15. Shopify – Gross Merchandise Volume
Shopify tracks the gross merchandise volume to measure the total value of products sold on its e-commerce platform, highlighting its success and growth. Shopify’s NSM assesses its merchant ecosystem’s overall health, monitors sales trends, and identifies opportunities to enhance its platform’s features and services. By focusing on gross merchandise volume, Shopify can also provide valuable insights to their merchants, helping them optimize their online stores and drive revenue growth.
Our list of North Star metric examples can help you choose the right NSM for your business.
How to Choose a North Star Metric
Choosing the right North Star metric for your business is crucial for its success. Here are some steps to help you identify the most suitable NSM:
- Define Your Value Proposition: Understand the core value your business provides to customers and how it can be quantified.
- Consider User Behavior: Analyze user behavior and identify critical actions or interactions that align with your value proposition.
- Ensure Measurability: The chosen NSM can be accurately measured and tracked over time.
- Align with Business Goals: Align the metric with your overall business goals and objectives to ensure focus and drive impact.
- Iterate and Refine: Continuously monitor and evaluate the effectiveness of your chosen North Star metric, making adjustments as needed.
Schedule a Strategy Call with Teknicks
Choosing the right North Star metric can be challenging, especially with diverse options. If you need guidance or assistance in selecting and implementing an NSM for your business, schedule a strategy call with Teknicks!
Teknicks is a leading growth marketing agency that helps businesses define their goals, develop data-driven strategies, and achieve long-term success. With our expertise and experience, we provide valuable insights and recommendations tailored to your specific needs.
Remember, a well-defined North Star metric sets the course for your business and empowers your team to make informed decisions that drive growth and success. So, take the first step towards achieving your business goals by choosing the right NSM today!
