The North star metric: explained with an example

The North star metric is a key performance indicator (KPI) commonly used by companies and organizations to measure progress toward a long-term strategic goal or vision.

What is it?

It’s an important metric that captures the success of the organization/company. It helps align various initiatives to a central goal. When working on strategy, it’s good to ask oneself – “if I do this, will it improve or decrease the value of north star metric”?

Depending on the company you work for, the North star metric can be long or short term. As most things with life some “experts” will say that the north star metric should be a vision/long term thing but my personal opinion is that in startups with limited resources, the north star metric for reaching a certain milestone may vary a lot depending on the stage of the company.

How to find your North star metric

Every company can locate their North Star metric by asking what is the most important action a user takes that leads to a desired outcome.

For example the North star metric for a 🍕Pizza restaurant could be influenced by whether the business prioritizes loyalty, experience, speed, advocacy, or spending.

North star metric: exampleExplanation: Why pick this metric
Number of repeat customers per monthThis focuses on building loyalty and retention among the customer base by providing excellent food/service that brings diners back regularly.
Average order value per customerIncreasing order value focuses on economics and getting customers to spend more per visit.
Restaurant loyalty card holdersThis is a more brand-focused metric looking at how many promoters/advocates the restaurant has, measured by referrals, social shares, etc.
Percentage of deliveries within 30 minutesFor a take-out place, fast and reliable delivery is critical. This metric measures how often they live up to the speed promise.
Average online review ratingThis captures broader customer satisfaction and quality of experience. A high average rating suggests the restaurant excels at food, service, value, etc.

The key is picking a metric that aligns with the core brand identity and the company’s success in the phase the company finds itself. Most restaurants would likely focus on customer satisfaction and repeat business as top indicators.

A good North Star metric shows what your customers value about your product. It’s a metric designed to be simple and memorable, not a complex indicator. It should be easy for all employees to recall and rally around, and it should be remembered in their day-to-day tasks and decisions.

Startup North stars tend to be more flexible, simple, milestone-based, and central to the core business. They evolve with the business itself. Can you guess which one is Dashcam’s current North star metric? It’s Dash clips shared with team-mates (that lead to faster bug fixes)!

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