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The North Star Metric (NSM) is a powerful concept that has emerged in recent years from Silicon Valley companies with breakout growth. It helps teams move beyond driving fleeting, surface-level growth to instead focus on generating long-term retained customer growth.

The North Star Metric is the single metric that best captures the core value that your product delivers to customers. Optimizing your efforts to grow this metric is key to driving sustainable growth across your full customer base.

  • SE

    Sean Ellis

    about 1 year ago #

    A couple of examples I mention in the article are
    1) Airbnb - nights booked (value for hosts and guests every time a night is booked)
    2) Facebook - Daily Active Users (every time new users are on the FB platform it becomes more valuable to the other users)

  • DH

    Dani Hart

    about 1 year ago #

    Hey Sean - curious on your thoughts on what this user is defining as their north star metric in the post below. To me it seems their NSM - inbound leads - is not based on the benefit that the customer is receiving.
    https://medium.com/@manojnayak/what-is-your-north-star-234c8ba79395

    On that note... do you have any examples of vanity or misleading North Star Metrics that you've seen? I think it would help the community to learn from what is NOT a North Star Metric. :)

    • SE

      Sean Ellis

      about 1 year ago #

      Agree that inbound leads is typically not a good North Star Metric. It's more likely to be a lever for moving the NSM. And there are even variables to that lever. There is the quantity of inbound leads and the quality of inbound leads. As you mentioned the North Star Metric should reflect actual value created for customers and that generally happens with the engage with the product.

      The vanity metrics are pretty easy to spot as not being good NSMs (ie registrations). In my workshops a lot of times I'll have people suggest something like average visits per user or repeat usage rate. The problem with those metrics is that they don't give you the full picture of the expansion of value across a user base. If you use something like average visits per user as you guiding light of growth, you probably won't be focusing on driving new users but instead only focusing on expanding usage with your base.

      The best NSMs should prompt you to balance focus on bring in more new users and driving more usage from existing users.

  • AA

    Anuj Adhiya

    about 1 year ago #

    @sean what do you think the NSMs were for all the companies you helped grow?

  • BH

    Benji Hyam

    about 1 year ago #

    Glad you guys are starting to do original content!

  • RM

    Raluca Marmureanu

    about 1 year ago #

    Hah, we actually held a webinar yesterday on the topic and it's now available on demand.
    What Makes Users Stick with Your SaaS Product - http://www.avangate.com/lp/webinar-what-makes-users-stick-with-your-saas-product.html

  • LI

    Luis Felipe Inurritegui

    about 1 year ago #

    Hi Sean, great webinar on identifying your NSM!

    What would a good NSM for an bank's online banking platform be? Shared value is delivered by either checking balances or making a transaction (payment or money transfer). However, there's greater retention among users making payments/transfers compared to users only checking their balances.

    I though our NSM could be MAU or MAU with payment/transfers. Which one would you choose?

    Thanks!

  • BP

    bhola prasad

    4 months ago #

    Hi Sean, Really loved your concept of North star metric because they are way too many metrics and it's become totally overwhelming to understand what is actually going on. So, it is very important to find your few critical metrics ( KPIs) to measure success and growth.

    I basically like to pick 2 Key performance indicators ( North star metrics) in each of the 3 buckets - Acquisition, behavior, and outcomes to understand the complete journey from start to end.

    1. Acquisition - How good my/your company is acquiring the users.
    2. Behavior - what the customers are doing once they visited the website.
    3. Outcome - what is the impact of it on our business.

    6 KPIs to understand the complete success of a business. Solving for the complete journey and 100% of the customers, not just the 2-3% of the customers( the average conversion rate.)

    We recently wrote a post about it, in which we also did workout examples of 3 websites ( E-commerce and Non- E-commerce) and showed the process of finding the right KPIs( The North star metric) for any kind of businesses. If it might be of your interest, you can check out here - https://www.lifewithdata.com/2018/04/what-is-kpi-24-examples-of-most.html

    Please let me know your thoughts about it.

    Thanks, for reading it.

    With Regards,
    Bhola

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