• Matthew Lerner

How to find your North Star metric (with examples)

Updated: Apr 22

What do Amazon, Facebook, Google, Slack, Hubspot, and Airbnb all have in common? A North Star metric. And there’s a reason why the most successful companies of our generation have a North Star metric.


Alignment

Employees all want to perform well (understandably). So, instinctively, they default to just being good at their job. For example, a good product manager builds good product, engineers want to write robust code, and a compliance person wants to comply at any cost. So, unless you tell them otherwise, they’ll set their goals in terms of their own job function (a silo).


That means everyone pulls in different directions, fights for resources, and “buy-in.” People debate and play politics, the company drifts.


“Show me the incentives and I’ll show you the outcome.” — Charlie Munger


A good North Star replaces everyone's default silo with a common target.


What is a North Star Metric, and how to find yours?

Let’s start with first principles:

  1. Successful companies make lots of money

  2. Customers pay money in exchange for value

  3. Therefore, any successful startup delivers a lot of value to a lot of customers

  4. Your North Star should measure value delivered to customers

Think of your North Star Metric like this: How would customers naturally behave if they loved your product or service? And how many of them are behaving like that? (Track it in cohorts, improve it over time).


Three traits of a good North Star metric:

  1. Increments when you deliver value to customers

  2. Encompasses the entire funnel

  3. Simple and memorable

Those last two are critical so everyone can connect their work to this number.


Is revenue a good North Star?

There are many ways to deliver revenue without delivering value to customers — including price increases, custom dev work, and bundling. That's fine for established companies with a moat, but when a startup optimizes for revenue before product/market fit, that’s dangerous. (Plus, you can track a North Star long before you make profit or even revenue!)


Here are some example North Stars


B2C North Stars:

  • Facebook: Daily active users (DAUs)

  • Amazon: Repeat purchases

  • Spotify: Time spent listening

B2B North Stars:

  • Slack: Daily active users (DAUs)

  • Salesforce: Records created

  • Hubspot: Weekly active teams

Marketplaces North Stars: (The North Star for a marketplace is usually a transaction metric where buyers and sellers come together.)

  • AirBnB: Nights booked

  • eBay: Gross Merchandise Volume (GMV)

  • Uber: Rides per week

Next Steps to Align the Team

  1. Use the instructions above to agree on your North Star.

  2. Explain it to everyone in your org.

  3. Ask each person to explain to you how their work impacts the North Star, and have a useful conversation as they think about how to align their work with the broader company goal.

Remember, KPIs are only part of the puzzle. Download our free marketing strategy template PDF.

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