Your North Star Metric is the single most important metric that best captures the core value your product delivers to customers. Every team decision should move this number.
North Star Metric (NSM) is the one metric that matters most—it reflects customer value delivered and predicts business success. Good NSM characteristics: (1) Measures value to customers (not vanity), (2) Leading indicator of revenue, (3) Actionable (teams can move it), (4) Simple (everyone understands it). Examples by product type: Slack—Daily Active Users sending messages. Airbnb—Nights Booked. Uber—Rides per week. Amazon—Purchases per month. Netflix—Hours watched per week. WhatsApp—Messages sent daily. Finding your NSM: Ask "When do customers get core value from our product?" That moment = your NSM. Align entire company: Product builds features to move NSM, Marketing acquires users who will do NSM activity, Sales targets customers likely to hit NSM, Customer Success ensures customers consistently hit NSM. Track NSM weekly in all-hands, celebrate wins, debug drops. Avoid vanity metrics as NSM: Signups (not value), Page views (not value), Downloads (not activation). Exception: NSM can be intermediate metric early-stage (activations before revenue), but eventually must tie to revenue.
NSM: Daily Active Users. Found that "7 friends in 10 days" predicts long-term retention. Entire onboarding optimized around this metric. Billions of users today.
NSM: Nights Booked (not listings or signups). Teams focused on: More bookings, not just more hosts. Revenue predictably followed bookings.
NSM: "Active Projects Created" (not signups). Found users who create 3+ projects have 10x higher LTV. Product pushes project creation in onboarding. MRR grew 200%.
Without NSM, teams optimize different things—marketing chases signups, product chases features, sales chases revenue. NSM aligns everyone on what matters: customer value delivered. Companies with clear NSM grow 3x faster.
Ask: (1) What action means customer got value? (2) When customers do this, do they stay/pay? (3) Can we measure it easily? That's your NSM. Example: Streaming service = Hours Watched.
Yes, as company evolves. Early: Activation (users experiencing value). Growth: Engagement (weekly actives). Mature: Revenue (sustainable business). But change rarely—max once per year.
For mature companies, yes. For early-stage, no—revenue is lagging indicator. Better NSM: Customer value delivered (which leads to revenue). Example: "Weekly Active Power Users" better than MRR.
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