Metrics That Matter: North Star Metric
A North Star Metric simplifies decision making.It aligns everyone's compass in the same direction. It must capture the core value your product delivers to its customers.
The Trap of Vanity Metrics
Most startups die because they focus on the wrong numbers.They look at "Total Registered Users" or "Page Views." These are Vanity Metrics . They always go up and to the right, even if the business is dying.
My mom visiting my site 10 times a day is 10 Page Views.It is $0 of value.
What is a North Star Metric(NSM) ?
An NSM is the single metric that best captures the value delivered to your customers . It is a leading indicator of future success.
Spotify's NSM
Time Spent Listening
If users listen more, they value the service, are less likely to churn, and more likely to subscribe.
Airbnb's NSM
Nights Booked
Not "Searches"(intent only), not "Revenue"(lagging).Nights Booked = Value for Host + Value for Guest.
Zoom's NSM
Weekly Hosted Meetings
Not "App Downloads." You only get value if you actually talk to someone.
Input Metrics> Output Metrics
You cannot directly influence your NSM.It is an Output Metric . You can only influence the Input Metrics that drive it.
Example: Spotify
Output: Time Spent Listening.
Inputs:
- Depth of Library(Can I find the song ?)
- Recommendation Quality(Do I discover new songs ?)
- Reliability(Does it buffer ?)
- Social Sharing(Did my friend send me a link ?)
Product teams should own the Input Metrics. "Improve Recommendation Algorithm by 10%" is an actionable goal. "Increase Listening Time" is a wish.
Counter - Metrics
Every metric can be gamed.If your NSM is "Messages Sent," your team might add a feature that auto - spams everyone's contact list. Messages go up, but user trust goes down.
You need a Counter - Metric (or Guardrail Metric) to protect quality.
Example: "Increase Emails Sent" (NSM) vs. "Unsubscribe Rate" (Counter-Metric).
Conclusion
Measurement is focus.If you measure everything, you measure nothing.Find the one number that represents customer happiness, and obsess over it.