Establishing a North Star Metric (NSM) is key to making substantive investments in growth. But it's often ignored or it breaks the fundamental rules that make NSMs so effective at influencing Growth. That's why we compiled three north star examples that illustrate what works and what doesn't.
North Stars are neither aspirational (mission-driven) nor sales-oriented.
They are the fundamental achievements you need to hit over and over in order for a startup or established business to succeed.
First, what is a North Star in business?
For one, it's the most important KPI for digital marketing... but it's not just about marketing. It's the most important KPI for anything your business does.
Mixpanel does a great job explaining what a North Star in business is in their blog post, "What is a North Star Metric?"
They say it must do three things (and I wholeheartedly agree):
- Lead to revenue
- Reflect customer value
- Measure progress
That said, there's actually a test to determine whether your north star goal works.
- It must be simple to measure
- It must be directional
- It must be cultural
- It must be balanced
Click here to learn more about the North Star Metric Framework 4-part test
Good and bad North Star Metric examples and how they influence growth
North Star Orange Pegs - Growth Marketing Agency
Our North Star goal: Client North Star Achievement
Why it works: We went through one other North Star iteration early on and changed it because we realized it broke several critical rules. Originally, we said it was "signed engagements." We rationalized it by connecting signed engagements to the value of our program. The forecasted value (selling a new client) and the actual value (renewing a client).
However, when we started adding to our product pool, including two that can be purchased directly from the website, it suddenly didn't work any more. So, we recognized the flaw and updated it to helping our clients achieve more of their North Star.
As far as the 4-part test was concerned, our original NSM broke rules 2, 3, and 4.
Today, it's a completely different story.
- It's simple to measure as long as our client's north stars are simple to measure (which they are because establishing this metric is our first exercise)
- It's directional because it doesn't matter what product or service we develop, they're designed with that one purpose in mind: Generate NSM wins
- It's cultural to the bone. ANY time we discuss new campaigns or system or product updates, it's the first and last question we ask. In the past, being so focused on Orange Pegs, we pushed off important process and program updates and our production team felt completely disconnected from our higher purpose.
- And it's balanced between our needs and the customer's take-away value. Prior, it was all about OP. Sure, the rationale was that clients would renew because we succeeded in helping them grow, but in practice we saw that wasn't always the case.
North Star Confidential - SaaS
The -original- North Star goal: Account signups
Why it didn't work: We found that this NSM changed often. Account signups indirectly led to revenue but didn't guarantee it. It only reflected value in the sales pitch and only up TO the paywall. Additionally, focusing on account signups also left out the B2B side of the business, which is about licensing their platform on white-labeled apps.
The NEW North Star: Trades on their platform
Why the NEW one worked: Trades are how they make their money regardless of where the account comes from. They show value in sales as well as in the UX and value proposition promised by the product with every trade. And, regardless of where the company goes in the future, they don't see it changing.
North Star Air BnB - Technology Company
The North Star goal: Booked rooms
Why it works: Booked rooms directly result in revenue. Success is proof that they demonstrated value to the customers (those listing their rooms AND those booking them). No matter what they're investing in, whether marketing or UX improvements, they can draw a line from them to the North Star. And, of course, it's easily measurable.
What's right for your business?
Here are a few more broad North Star metric examples based on some of the industries we work with often:
- Staffing & Recruitment Agencies: Filled Jobs or hours worked--although I recommend making it more specific to the mission. Job types can be good focal points as well, but don't forget the importance of having a North Star goal that's directional. That means it must be relevant in the past, present, and future.
- AI SaaS: Active users is not a good NSM... It's better to focus on what they're active with. Here are a few AI SaaS north star metric examples we helped shape:
- Products enabled for commercialization (AI-generated market research reports)
- Automated customer resolutions (AI help desk)
- Professional Services: The value of the main services rendered
- E-Commerce: The value of the products sold. We had a client that sold pet food, and their mission was to provide pets with better sustenance, not cheap food that degrades and shortens their lives. Theirs was "pets nourished."
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