The Ultimate Metric for BI Professionals: How to Find and Use Your North Star Metric

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.

How to Choose the Right Metrics for Your BI Dashboard

If you are a BI professional, you know how important it is to choose the right metrics for your dashboard. Metrics are the indicators that help you measure the success of your project and guide business decisions. But how do you choose the best metrics among the many available? In this post, we will give you five tips to select the most effective and relevant metrics for your BI dashboard.

1. Limit the number of metrics

More information is not always better. If you fill your dashboard with too many metrics, you might confuse your stakeholders and distract them from the ones that are really crucial for the project's success. Key metrics are those that are relevant and actionable, meaning that they tell you if you are reaching your goals and what you need to do to improve. For example, if metric X goes down, is that a good or bad thing? What action would you take if it went down that would be different if it went up instead? Your goal is not to cover every single use case, but 90% of the most common ones.

2. Align the metrics with the business objectives

To choose the best metrics, you need to understand what are the business objectives that you want to support and measure. For example, if the business objective is to increase customer retention, include churn rate in your dashboard. You will most likely not want to include a metric such as website traffic because that is not directly related to the business objective of increasing customer retention.

3. Check the necessary technologies and processes

Before choosing a metric, make sure that you have the necessary technologies and processes in place to obtain and analyze the data related to that metric. If you can't access the data or if they are not reliable, that metric won't be very useful.

4. Consider the cadence of data

You have to take into account how often the data are available and updated. If many metrics have a different cadence and frequency, it becomes hard to plan a periodic review.

5. Use SMART methodology

SMART methodology is a useful tool for creating effective questions to ask stakeholders. It can also be used to identify and refine key metrics by ensuring that they are specific, measurable, action-oriented, relevant, and time-bound. This can help you avoid vague or too high-level metrics that are not useful to stakeholders, and instead create metrics that are precise and informative.

An integrated view

In the BI world, data requires a dynamic and thoughtful approach to detect and respond to events as they happen. An integrated view of the whole business is required. In some cases, metrics can be straightforward. For example, revenue is fairly clear: Revenue goes up, and things are going well! But other metrics are a bit more complicated.

Let's take an example of a team of online tutors who want to measure their ability to effectively answer students' questions. Every time a student asks for help, a help request is created. These requests are handled by the first response team of tutors. Sometimes the first response team needs help answering more complex requests. They then reach out to the second response team. This is marked as a referral on the help request.

Imagine that the BI professionals working with this team now are trying to decide which metrics are useful in a dashboard designed to increase students' satisfaction ratings for help requests. Perhaps their stakeholders are interested in monitoring referrals to ensure that students are getting the help they need in a timely manner. So the BI team considers adding referral rate, which is the rate at which tutors are asking for help from internal experts, as a metric in their dashboard.

Note that an increasing referral rate could be good or bad. It might mean that tutors are being more student-centric and trying to ensure each student gets the best answer. But it could also mean that tutors are being overwhelmed with questions and having to pass them on to internal experts in order to keep up. Therefore, referral rate is a metric that doesn't have a clear direction; nor does it have an obvious influence on the decision-making process on its own. So, it's not a useful metric for this dashboard. Instead, the BI professionals select metrics that indicate success or failure in a more meaningful way. For instance, they might decide to include a metric that tracks when a tutor experiences missing help documentation. This will help leaders decide whether to create more documentation for tutors to reference. Notice how this metric has a clear line of action that we can take based on how high or low it is!

Conclusion

The ability to choose metrics that inform decision-making and support project success is a key skill for your career as a BI professional. Remember to consider the number of metrics, how they align with your business objectives, the technologies and processes necessary to measure them, and how they adhere to SMART methodology. It's also important to maintain an integrated view of the entire business and how the information your metrics deliver is used to guide stakeholder action.

How to Boost Your E-commerce Sales by Reducing Cart Abandonment

Have you ever checked out an online store and added something to your cart, but then backed out of buying it? Maybe you were shopping for a new camera, a fitness tracker, or a gift for a loved one. But then you changed your mind because you found a better deal elsewhere, or you realized that you didn't really need it, or you got distracted by something else. When that happens, the online store has what's called an abandoned cart. According to e-commerce platform Shopify, online merchants lose 20 billion dollars a year in sales revenue because of cart abandonment. This is a huge challenge, but it's one that business intelligence professionals are very good at tackling. In this post, we'll show you exactly how they do that.

How BI Professionals Use Data to Understand Customer Behavior

BI professionals can use data to track where a customer came from, whether it was a Google search, an email link, or a social media post. Then they can visualize the journey the shopper took when visiting the website. They're even able to pinpoint exactly where that customer left and try to figure out why. For example, a BI professional might create a tool to monitor how attractive and relevant the website's product images are. If the team finds that they are too low-quality or outdated, the company can update them to better showcase the features and benefits of their products and persuade the customer to buy. The attractiveness and relevance of the website's product images is an example of a metric. A metric is a single quantifiable data point that is used to evaluate performance.

How BI Professionals Use KPIs to Track Progress Towards Goals

In BI, some of the most important metrics are KPIs, which are quantifiable values closely linked to business strategy that track progress towards a goal. Many people confuse KPIs and metrics, but they are different things. The basic point to keep in mind is that metrics support KPIs and in turn, KPIs support overall business objectives. It's also helpful to understand that KPIs are strategic, whereas metrics are tactical. Going back to our abandoned cart example, strong KPIs might be the number of visitors who complete a purchase, customer retention, or average order value. Think of it this way: A strategy is a plan for achieving a goal or arriving at a desired future state. It involves making and carrying out plans to reach what you're trying to accomplish. A tactic is how you get there. It's a method used to enable an accomplishment, including actions, events, and activities. Tactics take place along the way as part of your strategy to reach your final objective. Like stepping stones between each milestone. Reach enough milestones and you'll reach your goal.

How BI Professionals Use Monitoring Tools to Enable Data-Driven Decisions

Understanding business objectives and what is needed in order to achieve them is the first step in BI monitoring. BI monitoring involves building and using hardware and software tools to easily and rapidly analyze data and enable stakeholders to make impactful business decisions. Let's say our e-commerce merchant sets a goal to decrease cart abandonment by 10% in six months. The BI professional would create a tool that monitors product images in order to help achieve that KPI. Rapid monitoring means that the people using BI tools are receiving live or close to live data. In this way, key decision makers know right away if there's a sudden drop in the number of visitors who complete a purchase, or if they run out of stock on a popular item, or if customers are leaving negative reviews or feedback. Knowing right away means that the company can fix whatever the problem may be as quickly as possible. This is one of the main ways in which BI professionals add real value to their organizations.