“Each strategy we had at Netflix—from our personalization strategy to our theory that a simpler experience would improve retention—had a very specific metric that helped us to evaluate if the strategy was valid or not. If the strategy moved the metric, we knew we were on the right path. If we failed to move the metric, we moved on to the next idea. Identifying these metrics took a lot of the politics and ambiguity out of which strategies were succeeding or not.”Gibson Biddle, Netflix Former VP of Product

North Star metrics (NSMs) are the metrics that best capture the value that a product delivers to customers. NSMs are unique to every organization and change over time. This means that at the Growth, Expansion, and Maturity stages (and possibly even before) team need to come up with their own metrics.

Teams across product organizations rarely agree fully on which drivers matter most. This can lead to teams coming up with their own goals, doing their own research, and prioritizing initiatives that sometimes conflict with one another.

A good North Star metric helps to create a unified view of priorities. It can help drive team alignment and focus, and move your business forward.

The metric you choose should be a function of inputs that your team can influence. It should be predictive of mid- to long-term growth. For the team, it should be as simple as move the metric, grow the business.

Solving Product – North Star Metric Framework
The North Star Framework Worksheet

Rules of Thumb for Choosing a North Star Metric

John Cutler, who co-wrote a full book on the North Star framework, says that a good NSM:

  • Expresses value: It’s easy to see why it matters to customers.
  • Represents vision and strategy: It reflects the company’s current product and business strategy.
  • Is a leading indicator of success: It predicts the future, rather than reflect the past (e.g. leads vs. sales).
  • Is actionable: Team members can take action to influence it.
  • Is understandable: It’s easy to express, and can be communicated in plain language that non-technical folks understand.
  • Is measurable: You can track it with analytics or via some other form of reporting.
  • Isn’t a vanity metric: Just because something is measurable doesn’t make it meaningful. When your NSM increases or decreases, you have to be confident that the change is meaningful.

Your NSM should change as your strategy changes. For example, it can be a good idea to go from revenue, to value, to the metric that best captures your unique business model.

Over time, Amplitude’s NSM evolved from early revenue to Weekly Querying Users (the number of users analyzing data), to Weekly Learning Users (the count of active users who have shared a learning that’s consumed by at least two other people in the previous seven days). The metrics Amplitude chose were indicative of the stage of growth they were at, and their current strategy.

I recommend reading Amplitude’s North Star Playbook to help you find the best metric for your business.

How to Use Your NSM

Once you have a clear NSM, your team should focus on the opportunities that are the most likely to influence its inputs.

For example, if you were to look at Facebook’s famous ‘Seven Friends in 10 Days’—which meant that if users added seven or more friends in their first ten days, they were extremely likely to keep using Facebook—the opportunities that were worth prioritizing might have included the sign up, onboarding, and invitation flows.

The best way to measure progress is against a goal. Set your NSM, and then use it to move your product forward.

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This post in an excerpt from Solving Product. If you enjoyed the content, you'll love the new book. You can download the first 3 chapters here →.

Categories: Customer Research Technique