A North Star Metric is the single measurement that best captures the core value your product delivers to customers. It aligns the entire company around one indicator of success, connecting daily work to long-term outcomes. When chosen well, improving your NSM means customers get more value, revenue grows, and the business compounds.
Key Concepts
A good North Star Metric has three properties: it reflects customer value delivered (not just business extracted), it is a leading indicator of revenue (improving it will eventually grow the business), and every team can influence it through their work. Revenue itself is rarely a good NSM because it is a lagging indicator that does not tell you why the business grows.
Examples reveal the pattern: Airbnb uses "Nights Booked" (value delivered to both hosts and guests). Spotify uses "Time Spent Listening" (engagement with core value). Slack uses "Messages Sent" (team communication happening). Shopify uses "Gross Merchandise Volume" (merchant success). Each metric captures the moment customers receive value.
Input metrics break the NSM into components teams can directly influence. Airbnb's "Nights Booked" depends on listings created, searches completed, booking conversion rate, and cancellation rate. Each team owns one input metric that feeds the North Star.
Why It Matters
Without a North Star, teams optimize locally. Marketing maximizes sign-ups regardless of quality. Product ships features without measuring impact. Engineering prioritizes technical elegance over user value. The NSM creates shared language: "Does this improve Nights Booked?" turns political debates into measurable questions.
Alignment compounds. When 100 people make daily decisions that incrementally improve the same metric, the compounding effect is enormous. Misaligned teams cancel each other's efforts.
In Practice
A B2B SaaS company selling analytics software identifies "Weekly Active Reports Viewed" as their North Star. This metric means customers are getting value from the product (viewing reports means making data-driven decisions). The product team improves report creation, the growth team optimizes onboarding to first report, the data team ensures report accuracy, and customer success proactively helps customers build meaningful dashboards.
Common Mistakes
Choosing a vanity metric (page views, registered users) that does not correlate with retention or revenue. Changing the NSM every quarter, when in reality it should be stable for years. Ignoring counter-metrics: if "Messages Sent" is your NSM, also monitor "Messages Read" to ensure volume reflects genuine communication, not noise.