The characteristics of a strong North Star
What a North Star is not
North Star Checklist
. We can see why it matters to customers.
. Our company’s product and business strategy are reflected in it.
of success. It predicts future results, rather than reflecting past results.
. We can take action to influence it.
. It’s framed in plain language that non-technical partners can understand.
. We can instrument our products to track it.
. When it changes we can be confident that the change is meaningful and valuable, rather than being something that doesn’t actually predict long-term success—even if it makes the team feel good about itself.
When teams fail to connect their North Star Metric to customer value, they risk leading their business down the wrong path. This means that simple counts of users, like “Daily Active Users” or “Registered Users,” are not optimal North Star Metrics, as they say nothing about what your customers value.
Represents Product Vision & Strategy
The North Star Metric represents the strategy of your business and your product. Once you have determined your North Star Metric, see if you can find your product strategy and vision within it. If you’ve built a strong North Star, you should be able to—at a high level—understand your company’s product strategy and your product’s vision by looking closely at the North Star.
Each strategy we had at Netflix—from our personalization strategy to our theory that a simpler experience would improve retention—had a very specific metric that helped us to evaluate if the strategy was valid or not. If the strategy moved the metric, we knew we were on the right path. If we failed to move the metric, we moved on to the next idea. Identifying these metrics took a lot of the politics and ambiguity out of which strategies were succeeding or not.
We generally advise that your North Star should be unique to your business, expressing your company’s and your product’s strategy and mission. However, some businesses may have a mission that’s not particularly differentiated. That’s okay. If your business succeeds by executing well on a commoditized product, for example, don’t worry if your North Star might not feel particularly unique. Maybe your execution is what differentiates you.
Leading Indicator of Success
indicator of business success. This is why metrics like “Monthly Revenue” or “Average Revenue per User (ARPU)” aren’t optimal North Star Metrics: They tell you what happened in the past rather than predicting future results. Ideally, your North Star Metric is predictive of medium- to long-term sustainable growth.
For example, if you’re running a subscription-based product, you might consider annual revenue from subscribers to be a key metric, but it’s a lagging indicator. Instead, a subscription-based business could identify characteristics that correlate with a user who is likely to renew her subscription, and then build a North Star around that. If a user frequently runs a certain report showing the status of her customers, does that correlate to renewing a subscription? Perhaps that’s a hint that your North Star may be related to the information in that report.
Your North Star should be something you believe you can influence or do something about.
something about. This means it shouldn’t be a measure of a broader market trend or reflect real-world realities that would be true whether your product existed or not.
For example, a team building an HR app to improve companies’ employee experience and retention might consider “Customers’ Lifelong Employees” an aspirational North Star Metric, but broader trends in the economy and labor market will make it difficult for the team to influence this metric.
The North Star shouldn’t be so arcane or abstract that you can’t easily explain it to non-technical people or express it in plain language. A simple test: As you develop your North Star, describe it to someone who knows your business but lacks deep technical knowledge. If it’s a good metric, they’ll be able to quickly understand it without much trouble.
If you’ll never be able to configure your products and processes to collect the data needed to track and communicate the North Star Metric, it’s not a good metric, even if you can imagine it is a strong indicator of value to the customer.
Don’t fall into the trap of thinking that your North Star must be something you can measure with your current data and tools.
for the number of customers pondering the films, which is tougher to collect.
and investment in new tools, or even just improvements in communication and relationships, you’ll be able to measure what you want.
Not a Vanity Metric
for your North Star Metric.
Daily Active Users
Number of Downloads
Story Points Delivered
Time on Page
“A question I ask my workshop attendees,” explains Amplitude’s Senior Engagement Manager Parth Mistry, is “if this metric were to go up, would you be able to state unequivocally that this was a good or bad thing? And perhaps more importantly, what action can I take as a product manager or marketer based on this information?”
While it might make your team feel good to know that you had the most activity you’ve ever had on your inquiry page, or that this month your team had better development velocity than ever before, those metrics won’t actually tell you about the success of your product, and shouldn’t be used as your North Star Metric.
A delivery app had considered potential North Star Metrics like “People Opening the App,” “Scheduled Deliveries,” or “Early Deliveries.” But there was a problem. These metrics masked the real drivers of retention and customer lifetime value (LTV).
However, the team behind the delivery app conducted research with customers which concluded that valued deliveries were neither early nor late. Instead, these transactions simply had no issues—what the team ultimately called “Happy Deliveries.” The company found that Happy Deliveries are highly correlated with retention, which drives customer lifetime value. Thus, Happy Deliveries became the North Star Metric.
What the North Star is Not
for more information.
Your software development process
A prioritization framework
A goal-setting framework, like OKRs or Focus Cards, though the North Star can be a strong foundation upon which to base goals
Management by Objectives (MBOs)
Perfection (no framework is!). Many successful product teams have used other methods with much success. We think that’s great, and we encourage those teams to keep doing what they’re doing.
Chapter in Review
A good North Star satisfies a number of criteria. Use the checklist to evaluate your own candidates for a North Star Metric and Inputs.
A North Star is not the same as your roadmap, prioritization framework, or performance management system.
No framework is perfect. If you are successfully using other methods and techniques, by all means keep doing what you’re doing.