What is north star metric and why is it important for growth marketing?

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A North Star Metric is a key success metric that helps guide a business’s growth decisions. It’s important because it focuses a company’s efforts on a specific metric that has the greatest impact on long-term growth. By focusing on a single key metric, a company can have a clearer understanding of how it’s performing against its growth objective and take steps to improve its marketing strategies and other areas of the business. Additionally, a North Star Metric can help align the entire team around a common goal and ensure that all growth decisions are aligned with that goal.

Understand the purpose and value of using the North Star Metric as a framework
“There was nothing to connect the dots. I think that’s why we were going in circles. That’s the main benefit of North Star: connecting different perspectives.”

This is a quote from Sean Ellis , the person responsible for whatsapp mexico popularizing the term “ growth hacking ” in 2010. It was from this pain (when he worked as a marketer at Dropbox) that everyone wanted to grow the business, but with different focuses, that he thought of NSM.

The purpose of the North Star Metric is to define a metric that is crucial to the business , that connects all teams (mainly with the business vision and mission) and that everyone makes a great effort towards.

The Elements of the North Star Metric
In addition to the metric, the NSM includes a set of primary inputs that collectively act as factors that impact the metric. Product teams (and other business areas) can directly influence these inputs in their daily work.

This combination of core metrics and inputs serves three critical purposes:

Helps prioritize and accelerate decision-making (informed but decentralized);
Helps with team alignment and communication;
Enables teams to focus on impact and sustainable product-led growth.
Together, the metric and inputs look like this:

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(img via Amplitude)
The North Star Metric
The heart of the North Star Metric framework is in fact a North Star Metric. Strange, isn't it? But that's exactly it, it's that single main metric we talked about a few paragraphs above, which will connect the teams and thus make the business grow.

For example, in 2005, when Netflix was still focused on shipping DVDs, the company’s product team established a North Star Metric as a percentage of customers who queued up three or more DVDs during their first session with the service . The team understood that this statistic epitomized Netflix’s differentiation strategy, and that increasing it would improve customer value and key business outcomes—like customer retention and, ultimately, subscription revenue.

Results and Value
The North Star Metric is a leading indicator of business results. We already understand that. However, it should be clear that this metric should deliver sustainable growth and value to the end customer. As the metric evolves, you can expect your company’s results to adjust over time.

The inputs
Inputs are as important as the metric itself. This is a small set (3-5) of influential and complementary factors that directly affect the North Star Metric and that the team believes it can influence through its product offering.

Inputs can vary greatly depending on the industry, business model, and unique characteristics of a product. The key is to identify the key factors that contribute to your business’ North Star Metric. We see the North Star Metric as the main reasons for inputs to exist and for them to be well-described and actionable.

“The work”
The North Star Metric and its inputs should be connected to the tasks of research, design, software development, refactoring, prototyping, A/B testing, and more. We call this “the work.” Teams connect their initiatives to their North Star, and everything should align with the strategy driven by the North Star Metric.