Summary: A north star metric is a crucial metric that reflects the core value of a business and guides its long-term growth. In this post, you will learn what a north star metric is, why it is important, how to choose one, and some examples from different industries.
What is a north star metric?
As a business intelligence (BI) professional, you know how important it is to choose the right metrics to measure the success of your projects. But how do you measure the success of your whole business or team over time? That's where a north star metric comes in.
A north star metric is a single metric that reflects the core measurable value of your business's product or service. It is intended to represent your business's mission and vision, and to drive your business forward. That's why it's called a north star metric– like the north star can be used to navigate the wilderness, this metric can be used to navigate your business decisions and lead you to growth.
Why do you need a north star metric?
Having a north star metric as the guiding light for your whole business is useful in three primary ways:
• Cross-team alignment: Different teams have different specialties and focuses that help your business function. They aren't always working on the same projects or with the same metrics, which can make it difficult to align across the whole business. A north star metric allows all of the teams to have a consistent goal to focus on, even as they work on different things.
• Tracking growth: It can be difficult to understand and track the growth of your whole organization over time without understanding the driving metrics that determine growth. A north star metric provides a long-term measurable data point that stakeholders can focus on when discussing overall performance and growth in your business.
• Focusing values: A north star metric is primarily a guiding principle for your business– it determines what is important to you and your stakeholders. This means that choosing the right metric to guide your business can help keep your values in check– whether that's customer loyalty, number of users completing a core action, or user engagement.
How do you choose a north star metric?
Because north star metrics are so key to your business's ongoing success, choosing the right metric is a foundational part of your BI strategy. The north star metric has to measure the most essential part or mission of your business. And because every business is different, every business's north star metric is going to be unique. In order to determine what the most useful north star metric might be, there are a few questions you can ask:
• What is essential to this business's processes?
• What are the most important KPIs being measured?
• Out of those KPIs, what captures all of the necessary information about this business?
• How can the other metrics be structured around that primary metric?
What are some examples of north star metrics?
Because more businesses have begun using north star metrics to guide their BI strategies, there are a lot of examples of north star metrics in different industries:
• Travel:
• Number of trips booked
• Number of referrals
• Average trip duration
• Entertainment:
• Number of monthly active users
• Number of songs played
• Average listening time per session
• Health and fitness:
• Number of workouts completed
• Number of calories burned
• Workout satisfaction score
• Banking:
• Number of accounts opened
• Total deposits made
• Customer retention rate
These are just a few examples– there are a lot of potential north star metrics for businesses to choose from across a variety of industries, from education to gaming!
Key takeaways
As a BI professional, one of your responsibilities will be to empower stakeholders to make BI decisions that will promote growth and success over the long term. North star metrics are a great way to measure and guide your business into the future because they allow you to actually measure the success of your whole business, align teams with a single goal, and keep your business's values at the forefront of their strategy.
