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Lucas HamonDec 14, 2021 7:15:00 PM3 min read

What is a North Star Metric?

What is a North Star Metric?
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Find and use your most important business growth calibration tool

In Growth Marketing, the "North Star Metric" or North Star goal is a term used to describe the outcome that all paths must lead to when it comes to growth investments.

It can be specific to revenue (client acquisition). It could be about advertisement consumption (time spent on a social media platform).  It could be about any number of things.

How to Create Your North Star Goal

Here's how to create a powerful North Star Metric so that it serves as the guiding light to growing your business, no matter how neck-deep or in-the-weeds or up-to-your-eyes-in-alligators you get.

Specifically, these North Star metric concepts are for businesses that have a viable product and have entered growth mode.

Pre-revenue startups that are just getting into product development have different goals than those that are a little further along in the journey, and my greatest stories and successes come from working with businesses that are making strides to scale their successful business model.

Ideally, your business:

  • Has a proven product that works
  • Has a (semi)-steady stream of income
  • Has measurable outcomes
  • MUST grow

That isn't to say:

  • You're 100% committed to your product or service offering or that you're not innovating
  • Your income doesn't fluctuate or that the business is even profitable
  • Your business has measurable outcomes you understand 
  • It is growing

 

Rules for setting good North Star Metrics


1) It should be rigid enough to:

  • Clearly articulate the mission of your investments
  • Define a single accountability standard to which all growth investments will be held
  • Show value to the customer(s) AND your stakeholders

 

2) It should transcend sales and marketing:

  • Ability to deploy a wide array of tactics, contributions, and participants without betraying the point of the North Star
  • Shift tactics and goals without shifting the North Star when the context changes
  • When you solve marketing problems today, you may create sales problems tomorrow
  • It could apply to product improvements or any aspect of the sales spectrum, from Acquisition to Activation, Revenue, Retention, and Referral (They call this "Pirate Metrics"--Gold star if you can say why that is without using Google or reading this article)

 

3) It should be contextual

  • A revenue figure won't cut it
  • ... but the transaction that leads to it could
  • It should consider your formula for winning today

 

4) It should be measurable

  • And all roads that lead to it should be as well
  • ... which means you're willing to invest the proper resources into the proper tech

 

Now, I'll illustrate with an example of a meaningful North Star metric:


  • Company: Orange Pegs
  • Industry: Growth Marketing Agency
  • Our North Star: Helping other businesses achieve more of their North Star
  • Our Goals: More North Star achievement in every engagement
  • How we measure it: 
    • Every client is different, and their North Star is the first thing we define
    • We measure by engagement, 5 months for the first, 12 for the second
    • Client renewals are a big indicator of success

Let's see whether it passes the tests:

  1. It's clear that all investments must result in clients grown to be considered a win
  2. It captures everything--from attracting and closing new business (we can't help you grow if we don't bring you in as a customer), renewing old clients (they do this when we move the needle), and motivating existing customers to send more business our way (promises made; promises kept). The goal of the day could be any one of those things. Tactics could include methods for attracting new leads, sales processes for engaging leads with discovery meetings, contract or sales deck improvements, client onboarding, reporting and service cycles, product development and service improvements or innovations, marketing that motivates testimonials and direct introductions, and on and on and on. 
  3. Lines can be drawn from anywhere in the Pirate metric funnel to the impact those activities have on it (read more about Pirate Metrics)
  4. We're demonstrating value to our customers by obsessing over it

 

CONCLUSION

A good north star metric will help you keep the horizon level as you start executing your plans for business growth. It keeps people on the same page and sets the single most important accountability standard, so stakeholders feel that their vision is being heard and participants can't hide behind vanity metrics.

What's your North Star?

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Lucas Hamon

Over 10 years of B2B sales experience in staffing, software, consulting, & tax advisory. Today, as CEO, Lucas obsesses over inbound, helping businesses grow! Husband. Father. Beachgoer. Wearer of plunging v-necks.

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