60-Second Read: Finding Your North Star Metric

1 min read - Strategy
Paul Jarrett

Managing Director

In my opinion, there is no more important indicator of an organisation’s long-term growth than their North Star Metric (NSM).

The challenge with sustaining consistent growth is in most part a lack of focus. Each department throughout an organisation has its own set of goals. Every team chases its own One Metric That Matters (OMTM) to achieve rapid growth.

The North Star Metric, meanwhile, is a company-wide. It is the number that best reflects the value you provide to your customers. The more value you provide, the higher your retention, and the higher the likelihood that your customers end up doing your marketing for you.

A North Star aligns your company towards a single focus. It gives every member of your organisation a shared vision that is directly tied to added customer value.

A good North Star Metric must be:

  • Measurable
  • Representative of your core product strategy
  • A leading indicator of an outcome you want to achieve

This cannot be revenue as this is just the price your customers pay. Instead, your North Star should reflect what they get back. Revenue is the result of a good North Star.

Famous examples of North Stars include:

  • Spotify: Time spent listening
  • LinkedIn: Number of endorsements
  • Amazon: Purchases made per month
  • AirBnB: Number of nights booked
  • Uber: Rides per week

Taking a step back from your department or team to look at the bigger picture without biases can be challenging. If you are developing a North Star Metric for your organisation and are interested in how Sonin can help, please get in touch.