Navigating by the Stars

A popular concept for driving growth and measuring product success is the North Star Metric. My knee jerk reaction to this concept was that it was another buzz term and a waste of time. There is no one size fits all metric that will tell you the value your customers receive from your product. As I researched the topic, I started to understand how a North Star Metric could be a useful tool.  ​

The logic behind this concept is to create a metric to measure progress against a vision statement, and everyone will align their efforts to further a single goal. It's flashy, all the big kids are doing it, it's a vital part of a product-led growth strategy, but is it the right thing to do?

Sean Ellis from Growth Hackers is quoted frequently in discussions regarding the North Star Metric. According to Ellis, "The North Star Metric is the single metric that best captures the core value that your product delivers to customers." Mixpanel summarized it succinctly as a metric that must "lead to revenue, reflect customer value, and measure progress." Everyone in the organization should optimize to advance this metric. If you're not sure what to do to add value, follow the North Star. Sounds good to me. What's the problem?

Let's take a step back. In recent articles, I've talked about cognitive bias and how it impacts our perception of data. We use metrics to mitigate cognitive bias and objectively inform us of the outcome of our experiments. Unfortunately, these same cognitive biases can lead us to define wrong metrics. 
Pitfalls of focusing on a single metric are:

• tunnel vision
• focusing on the wrong metric
• missing queues that the landscape has shifted
• lack of understanding of how departmental efforts can support the North Star

How can we compensate? Use your North Star as an anchor and then create metrics around it to provide additional context. These input metrics should fall into four dimensions: 

• Breadth: number of customers doing something
• Depth: how much of that they are doing
• Frequency: number of times per period a customer does something
• Efficiency: how well they can do that

Amplitude has a great illustration of how to tie product initiatives to dimensional KPIs that support the North Star. 

A North Star Metric can be a helpful tool. It makes a good story and is a quick way to determine if you're still on the right path. Make sure you're getting the whole story by creating a framework of sophisticated metrics to provide insight on multiple dimensions. ​​Keep it simple and be prepared to adjust if your metrics are telling you the landscape has shifted.