North Star Metrics are the top-line metrics that all company priorities are aligned around.
Whatever companies choose as their guiding metric, all energy and brainpower will flow in that direction.
There are six categories of North Star Metrics:
- Revenue (e.g. ARR, GMV): The amount of money being generated — the focus of ~50% of companies.
- Customer growth (e.g. paid users, market share): The number of users who are paying — the focus of ~35% of companies.
- Consumption growth (e.g. messages sent, nights booked): The intensity of usage of your product, beyond simply visiting your site — the focus of ~30% of companies.
- Engagement growth (e.g. MAU, DAU): The number of users who are simply active in your product — the focus of ~30% of companies.
- Growth efficiency (e.g. LTV/CAC, margins): The efficiency at which you spend vs. make money — the focus of ~10% of companies.
- User experience (e.g. NPS): The measure of how enjoyable and easy to use customers find the product experience, overall — the focus of ~10% of companies.
How to pick a North Star Metric?
Start with the chemical(s) your product deals with & consider the associated metric:
- Cortisol (Stress) – Revenue metric
- Endorphins (Pain Relief/Euphoria) – Freemium Conversion metric
- Adrenaline (Presence/Focus) – Session Duration metric
- Dopamine (Feel Good) – Usage Frequency metric
- Oxytocin (Trust/Love) – Brand metric
Your customers experience your product through the chemicals/hormones it generates (or relieves). So measure that experience accordingly.