North star metric

The north star metric (NSM) is a single metric an organization observes to track the value attained by its customers. A good north star metric is a leading indicator.

It is sometimes easy to say one’s north star metric is monthly recurring revenue (MRR) but doing so will not yield actionable information. MRR does not indicate the value attained by your customers. MRR is also a lagging indicator since we can only identify it at the end of the month.

Having a north star metric helps align everyone on the team, and possibly the organization, towards a common goal. It is not uncommon for teams within an organization to find it difficult to influence the organization’s NSM. In that scenario the team can have its own NSM which will support the organization’s NSM.

Examples of north star metrics:

• AirBnB - Number of nights booked
• Facebook - Daily active users (DAU)
• Uber/Lyft - Weekly rides

Can you identify your company’s north star metric?