Even when you strip back your metrics to just half a dozen, that can still be a lot to process every week, and what happens when two of them appear to conflict? In other words, what happens when the easiest way to grow one will mean reducing another? What should take precedence?
This is why we create north star metics. Your north star is your number one measure of success and should act as a guiding light during all strategic decision making.
It ensures clarity and alignment throughout the organisation and that when compromise has to be made, everybody understands that this is this is the metric that takes priority.
Your north star should ideally do three things:
- It should represent the value the customer is taking from your product or service
- It should be a great indicator of present and future revenue
- It should ideally be aligned to the brand core and mission, or at least not have the capacity to be contradictory.
An example of a northstar metric is Facebook’s monthly active users. This is the number one metric at all times and is never undermined. It is a great reflector of customer value as it people are only active if they are having a good experience, it is highly indicative of current and future revenue, and is closely aligned to their brand mission which is to bring people closer together.
Closely related to a north star is what is known as a magical moment, which is the key driver of your north star. For Facebook this is when a new user gets 10 friends within 14 days – this is the moment at which the user starts to see value from Facebook, and is a great indicator of whether or not they remain part of the Facebook community. For someone looking to sell stuff on eBay, the magical moment is the first time that money lands in their bank account.
The concept of north star metrics along with their magical moments has become huge within technology companies like Facebook, but actually its principles are quite universal and I would encourage any aompany, even traditional B2B firms to ask these questions and identify their guiding light.
See you next time.