A North Star metric (NSM), such as the polar star that indicates the management of the browser, guides the company to its own objective, unique and absolute. This indicator points to long -term growth, measuring the value given to the customer when providing products or services. The NSM is somewhat the Mother KPI of all the company’s performance indicators: it is improving its conversion rate, its retention rate or its turnover that the company continually approaches its final objective, that is, its lasting development.

What is a North Star metric?

North Star Metric is the indicator used to see the ultimate goal of a company. It is described as a polar star because it designates management so as not to lose sight of the end of lasting growth.

What is the difference between the North Star metric and the other performance indicators?

The North Star metric is distinguished from the performance indicators of other companies, such as KPI and OKR (key objectives and results):

  • There is no formula established to calculate the NSM, each company defines its own North Star metric according to its activity.
  • The NSM designates the absolute limit of the company, does not stop in intermediate objectives. The intermediate objectives, on the other hand, help to achieve the NSM. This makes North Star’s metric a holistic approach for the definition of commercial objectives.
  • North Star’s metric is not specific to a company service: each team is aimed at the same North Star metric and uses KPI ad hoc for this purpose.

Why use a North Star metric?

Increase customer satisfaction

North Star Metric focuses on customer satisfaction. In fact, it makes possible to know the value that customers obtain from the use of the company’s product or service, thus promoting their continuous improvement. By focusing on the value to customers, companies find an increase in their 60 % billing on average.

Increase business growth

Ultimately, it is customer satisfaction that conditions the sustainability of the company. It is essential to have an interest in financial metrics, such as profitability threshold or BFR, to generate short -term growth. By extension, the North Star metric adopts a long -term vision, and is the sustainable quality of the company’s offer that records it over time. The businessman Sean Ellis, inventor of the North Star’s metric concept, explains that “The optimization of your efforts to develop this indicator is essential to generate sustainable growth of all its customers”. When the company’s shares are aligned with its North Star metric, its productivity increases by 25 %.

Promote equipment alignment

At the organizational level, North Star’s metric makes it possible to align teams with the sole objective and common for the entire company. The specific objectives of each service are intermediate: we are talking about OMTM for a metric that matters. The performance of companies that succeed in this alignment increases by 19 % on average.

For example: the sales team must increase sales, marketing equipment must improve the conversion rate, customer service must reduce CES. Defining a North Star metric allows each team to adopt a macro vision when fulfilling its own objectives: the entire company follows the same limit.

How to define your North Star metric?

  • Start with a rain of ideas
  • Place long -term objectives
  • Define the specificity of the proposed offer
  • Understand your clients
  • List the company’s performance criteria
  • Look for the main metric
  • Identify conversion time
  • Regularly follow North Star’s metric

Start with a rain of ideas

Before defining the North Star metric, the maintenance of rain brace sessions is essential. These sessions allow employees to discuss the essential characteristics of the offer and the value it provides customers, as well as the metrics that can be used as NSM.

Place long -term objectives

Assimilated to the final objective of the company, North Star’s metric should make it possible to define a long -term and common vision for the company to maintain a course. This helps to motivate employees and involve them in the growth of the company.

Define the specificity of the proposed offer

The determination of the North Star metric requires an identification of the specificity of the product or service, that is, which distinguishes it from the offers of the competitors. This is an opportunity for the company to present the value you want to contribute to customers to convince them to buy. The more value a product is, the more it will bring money to the company, allowing it to develop.

Understand your clients

To determine its North Star metric, it is essential to completely understand its customers. To do this, the company must identify the criteria to satisfy and buy customers and analyze the data on them to evaluate their way of interacting with the product or service. When it has analyzed this information and these behaviors, the company can act to meet the needs of customers to retain it.

List the company’s performance criteria

The next step is to identify and list the performance criteria. Priority should be given to the key success of the company’s success indicators, that is, those that contribute to their long -term growth and in which it can act. Making a performance criterion to a lever that increases its turnover allows the company to determine its NSM.

Look for the main metric

After putting the most vital KPIs at the top of the list, the company must find a badge metric that covers all these indicators. Caitant for each product or service, must represent the added value of the company’s offer and align with its vision and its objectives for sustainable growth. For example, the North Star metric for a hotel corresponds to the number of reserved nights, while for an electronic commerce site, it can be the number of monthly purchases made.

But be careful, the choice of metrics such as income is a mistake to avoid defining the NSM. As Ward Van Gastean, one of the first certified computer pirates in Europe, says: “Admission is the price paid by its client. North Star Metric is the value that your client obtains in return. »

Identify conversion time

Then, the company must define the necessary conversion time for customers. It is about determining the stages followed by the latter until the phase of “click”that is, the first time that a customer interacts with a product or service, to find the common conversion activities of new customers.

Regularly follow North Star’s metric

Once the North Star metric has been determined, it only remains to be constantly followed, preferably every week, to measure its growth and the company’s performance compared to the indicator. This implies the prioritization of projects and actions that contribute directly to the improvement of the NSM. To remain relevant and efficient, North Star’s metric must also be adjusted according to the evolution of the company’s markets and priorities.

North Star metric examples

Spotify and Deezer

The North Star Metric of Spotify and Deezer: Listening time. Musical transmission services share an absolute objective: maximize the time spent to users to listen to songs on their platform. This is that companies evaluate the quality of their service, and is continuously improving this level of quality that companies ensure lasting development. The more the music user listens to, the more the service appreciates: it is still faithful and recommends it. The platforms, therefore, become attractive to perspectives and partners, according to their economic model.

Facebook and LinkedIn

Facebook and LinkedIn North Star metric: the number of active users per month. Social networks have different economic models, but an identical NSM: maximize not only the number of registrants, but especially the number of recorders who really use their platform, regularly. The more the use of Facebook increases, the more the company its advertising income increases;

Electronic Commerce Sites

The North Star metric of many electronic commerce sites, including Amazon: the number of orders per customer and per month. The same client that regularly orders the value provided by the electronic commerce service. The client is faithful and tends to recommend the site: the brand is gaining notoriety and is gradually developed. Keep in mind that the North Star metric of the electronic commerce site can also be the number of orders without return or after -sales service. When the site markets products that do not justify recurring purchases, large appliances, for example, the same de facto customer does not regularly order. The client, on the other hand, attests to his satisfaction and the value he gives to the brand, refusing to all complaints.

To go further, discover how to strategically evaluate the situation of your business with the kpi table model, or discover the reports and creation of HubSpot panels.