A north star metric is a company’s primary metric to measure its app’s success. Sean Ellis, entrepreneur and founder of GrowthHackers, was the first person to coin the term.
“The North Star Metric is the single metric that best captures the core value that your product delivers to customers,” says Ellis. “Optimizing your efforts to grow this metric is key to driving sustainable growth across your full customer base.”
Your north star metric centers your product development and in-app strategy toward a common goal while delivering the best app experience for users.
The Importance of Identifying Your North Star Metric
A north star metric can make a significant difference for your product team. Here’s why identifying your north star metric needs to be a priority:
Aligns Your Product Team
Your North Star Metric aligns your product team because it acts as a singular goal toward which your product team works. The metric should inform every decision your product team makes.
With a clear north star metric, there will not be any confusion from anyone on your team on what they should be working on. According to Andrew Miller, vice president of marketing at Orbit:
“Running any business can be a complex ecosystem of many moving parts,” says Miller. “That structure is rarely as simple as a single number defining direction or executive decision. However, actually having an overarching metric that gives direction and aligns all the other metrics together can be infinitely useful.”
Helps You Measure Progress
A north star metric acts as a benchmark against which you can measure the impact of each product initiative. It’s the one metric against which all decisions are made.
Typically, when you identify a north star metric, you’ll also identify sub-metrics to track as well. You will get a firm idea of how you’re progressing toward improving your north star metrics when you monitor these sub-metrics. Michael Brenner, CEO of Marketer Inside Group, believes a north star metric helps you make better business decisions:
“Data has never been more critical for businesses in every industry,” says Brenner. “It helps focus on what matters most. When a company knows what success looks like, it can make strategic decisions, implement new systems, and deploy changes that push metrics in the right direction.”
5 Characteristics of a North Star Metric
So, what does a good north star metric that leads your product team to success look like? The key factors that determine a relevant and successful north star metric include:
1. Helps Your Business Grow
You want to find a north star metric that helps grow your business. That way, you’re not just tracking a “vanity metric,” a metric that may seem good for you on the surface but doesn’t contribute to any actual business results.
For example, let’s say you’re managing a food-ordering app, such as Uber Eats. Your north star metric could be the number of orders each user makes.
The more orders your users make, the more revenue you can generate. It’s a north star metric that directly impacts your business results.
An example of a bad north star metric that doesn’t help your business grow is your number of registered users. That’s because the success of your app doesn’t depend on how many new users download your app. Instead, it’s how much time users spend within your app and how many of those users you can retain.
2. Shows Value to Users
Your north star metric must focus on user satisfaction and ensure they get the most out of your app. That way, they can see the value of your app and how it improves their lives.
To find your north star metric that shows value to users, first identify your “aha” moment. Your “aha” moment defines the pinnacle moment when the user realizes the value of your app and becomes a long-term customer.
As you identify your “aha” moment, you can find which specific metrics impact that particular moment. Different ways to find your “aha” moment include:
- Customer interviews: You can set up meetings with customers either remotely or in real life to ask any question you may have about their app experience. Make sure to ask the right customer discovery questions during your interviews.
- User surveys: Another way to collect user feedback is through user surveys. They’re forms you send via email with questions the user must complete about your app. A good tip is to make your questions open-ended to get the most out of your user surveys.
You’ll improve user engagement when customers see the value of your app. “The value that the product creates for your customers drives their engagement and ultimately creates value and strategic direction for your company,” continues Andrew Miller.
3. Aligns With Your Business Goals
A north star metric must align with your product vision and business goals. That way, the north star metric feels like something relevant to your whole team.
The ideal north star metric you choose will depend on the type of business goal you have. Here are examples of what different north star metrics could look like based on what you want to achieve:
- Improve engagement: Average User Session, Daily Active Users (DAU), Monthly Active Users (MAU)
- Increase revenue: Number of Orders, Average Order Value
- Increase customer growth: Customer Retention, Number of Paid Membership Users
When you clearly define your business goals, it’s easier to identify the north star metric that aligns with these goals.
4. Is Measurable
Your north star metric needs to be measurable to get an idea of the progress your team is making. Otherwise, you have no clue whether or not your product initiatives improve the user experience and help you reach your goals.
Your north star metric needs to be as specific as possible and must be something you can measure with numbers. For example, “brand awareness” is a vague north star metric that you can’t measure accurately. “Number of users with a paid membership,” on the other hand, is a north star metric that’s measurable.
5. Matches Your Customer’s Success
A north star metric needs to be the result of your user’s success with your app. That way, it helps put your focus into getting the user to achieve their desired results.
To find a north star metric that matches your customer’s success, identify your customer’s desired results with your app. Next, think about which app metrics align with that desired result.
6 Examples of North Star Metrics
In need of inspiration? Here are the critical north star metrics of some of the most popular apps out there and why they’re so effective:
1. Zoom: Weekly Hosted Meetings
Zoom is a web-conferencing platform that allows users to set up remote meetings. If users frequently host weekly meetings with Zoom, then it’s a sign that they’re enjoying the service and integrating Zoom as part of their routine. For Zoom, weekly hosted meetings are also a good measure of how many users it retains with its product.
The reason why Zoom’s Weekly Hosted Meetings is its key north star metric is that it’s the tool’s main functionality. Frequent weekly meetings show that users are able to get the most out of its product.
2. Facebook: Monthly Active Users (MAU)
Facebook’s north star metric is its Monthly Active Users because Facebook’s success depends highly on user engagement. The social media platform and its users only get value from the platform if they frequently use the platform throughout the month — Facebook sees value in the form of ad revenue and its users in the form of social engagement.
A metric like Monthly User Signups would classify as a vanity metric for Facebook because Facebook and its users don’t see value from user signups. Facebook can’t charge advertisers if its users don’t spend time on the platform and users wouldn’t connect with their friends.
3. Netflix: Watch Time
Netflix is a streaming service app that offers users an unlimited number of movies and TV series to watch. The more time users spend watching content on Netflix, the more likely they are to keep their subscription.
Since Netflix is a streaming service, getting users to return to their app and watch shows as long as possible is in its best interest. As a result, Watch Time is its perfect north star metric to measure performance.
4. Spotify: Time Spent Listening
Spotify is a music streaming service available on all devices. Spotify’s users get the most out of the platform when discovering and listening to new music, making Time Spent Listening the perfect north star metric.
Similar to Netflix, Spotify’s revenue and performance depend on how long users spend listening to music on its streaming platform, so it makes sense to choose Time Spent Listening as a north star metric.
5. Airbnb: Number of Nights Booked
Airbnb is a rental accommodation app for lodging and vacation rentals. The platform’s key north star metric is Number of Nights Booked.
There are two main reasons why Number of Nights Booked is a good north star metric for Airbnb. First, if the user frequently books nights with Airbnb, then it’s a sign that they have a good experience with the platform. Second, hosts on Airbnb also get value from the app each time a guest makes a reservation.
6. Slack: Messages Sent Within the Organization
Slack is a workplace management tool to help teams improve their communication. The software’s goal is to improve remote work and reduce the number of emails between team members.
Slack’s key north star metric is Messages Sent Within the Organization. If users frequently message each other within the app, then it’s proof that they see the value out of Slack.
Should You Only Have One North Star Metric?
Product managers generally agree that there’s just one north star metric, as there’s one north star in the sky. So, you should start with one metric but may decide on additional sub-metrics later on.
However, depending on the complexity of your mobile app, it makes sense to have multiple north star metrics to lead your product team. For example, if your app has different offers for various audiences, then you might need more than one north star metric.
The Best Product Analytics Data to Monitor Your North Star Metric
Product analytics tools are helpful when it comes to identifying and monitoring your north star metric. The software will help analyze the different behaviors that your most loyal customers vs. churning customers have.
That way, you can determine which type of activities make users stick to your app. You can use product analytics data to better understand your users with the following tools:
Mixpanel
Mixpanel’s custom funnel reports help you identify which users are the most loyal and which behaviors lead to retention. You can use these insights to determine your ideal north star metric.
Amplitude
You can use Amplitude to divide your user base into various segments to analyze how different users react to your app. Product managers will then better understand what user actions lead to better business results.
What’s Your North Star Metric?
A north star metric improves the direction of your mobile app strategy to satisfy more users. You’ll grow your user base and revenue and create a better app as a result.
“An effective north star metric is a product manager’s best friend,” says Akio Bandle, senior product manager at ZipRecruiter. “When your north star metric is clear, product ideation becomes a lot easier. Instead of asking yourself, ‘What should I build next?’ you should be asking, ‘What feature or product is most likely to move this metric the most?’”
But to improve your north star metric, you need to focus on optimizing your user experience. Your app needs all the necessary features to maximize user engagement, such as chat messaging or activity feeds, which Stream helps build, thanks to our APIs.
