Vikrama Dhiman
My name is Vikrama Dhiman. I lead Mobility Products @ Gojek. Previously, I led product teams at Bharti SoftBank (Airtel Money, myAirtel, Wynk), Directi (BigRock), Zeta (Corporate Benefits and Gifting), WizIQ (eLearning) and MakeMyTrip (Travel/ Hotels). I was an Agile Coach with Cisco, Yodlee, Sapient, HP & I am an avid reader.

North Star Metric for Product Teams: What, Why, How

A skill I learned late was defining a good North Star. I see product makers pick simplistic North Star Metrics and not be able to articulate what even is a North Star. This can make you fail your analytical/ data interviews & product development. This quick primer can help.

What is a North Star?

Start by literally thinking of the North Star which is used to provide direction esp for the ships. In product development, a North Star is that one metric that all experiments, features and improvements in a given product area would optimise for i.e. that one metric that helps provide direction to all the teams. It is one metric everyone in the company can use to align and measure progress. This is an important takeaway. North Star Metric was designed as part of the overall Growth Hacking concept by Sean Ellis.

The North Star metric is a long-term metric and ideally never changes unless your company direction or situations change. You are always improving this one metric and this one metric helps you track the three key goals of the company -> customer value, revenue and growth.

How to select a North Star?

A good North Star considers customer segments, the company mission, product flows, and what customer value makes you money. A North Star is something you can keep optimising almost endlessly. Lastly but importantly, it also has a time period (per day/ per month etc).

The benefits of a North Star Metric:

  1. Alignment: It helps align efforts across an organisation. It also ensures teams are not pulling against each other.
  2. Visibility: It helps everyone to provide visibility and transparency on how an organisation is doing, and also see how they contribute to the growth of an organisation.
  3. Direction: If selected correctly, North Star Metric helps you focus on your primary customer segment and how serving them helps the organization make money.

Tip: Always pick a leading indicator.

Summarising: A North Star metric is the one metric that’s most predictive of a company’s long-term success. To qualify as a “North Star,” a metric must do three things: lead to revenue, reflect customer value, and measure progress. If a metric hits those three points, and every department contributes to improving it, the company will grow sustainably—or so the theory goes.

Example: North Star for Instagram Stories!

  • Mission: capture & share the world’s moments
  • CX segments: Creators (influencers/ advertisers/ normal), Consumers (active/ passive)
  • Product stage: Late growth
  • Takeaway: Focus on creators
  • Key Product Flow: Creators sign up/ retain due to viewers

North Star Attempt 1->

  1. Number of stories
  2. Number of active creators
  3. Number of new creators
  4. Number of old creators
  5. Number of creators who post a story
  6. Number of creators who post a story with x views

The last one meets our criteria. Let us refine this further.

Refined Attempt 2-> Number of creators who post at least one story with gt x views per day

This North Star:

  1. Factors in both the key segments
  2. This seems like something everyone working on stories can optimise for
  3. Showcases the growth (engagement of new + existing users) -> if it falls, it indicates a fall in either retention or acquisition
  4. It also has the time factor

No North Star is perfect.

It is useful to also call out what would your North Star not cover.

For instance, the North Star we picked above for Instagram is heavily focused on views which can lead to passive viewers. Hence, we could consider refining it to indicate engaged viewership. This would then help the teams working on view engagement get more prominence. The North Star we’ve picked can also be influenced by strong new user growth which can hide old users’ engagement.

Let's do another example. What is the North Star for Google Search.

I have no clue what Google search’s North Star is and I can be wildly off but will learn a thing by putting this out there.

  • Mission: organise the world’s information & make it universally accessible & usable
  • CX segments: Internet property owners & professionals (webmasters, marketeers, advertisers, small websites, content apps/ websites), Searchers (active/ passive - advanced/ basic - vertical segment searchers like maps/ image/ video - mobile/ web/ speakers)
  • Product stage: Mature with no *direct* competitor but trends in Amazon search/ Social media
  • Takeaway: Focus on searchers
  • Key Product Flow: Quality matters. Most people don’t scroll and want the best result in the first 5 results - more important for mobile/ speakers/ maps.

North Star Attempt 1->

  1. Number of searches
  2. Number of active searchers
  3. Number of new searchers
  4. Number of old searchers
  5. Number of searchers who search at least once a day
  6. Number of searchers who click among a top x search result

The last one looks the most promising. Let us refine this further.

Refined Attempt 2-> %age of searches with clicks/ taps on top x search results per day

  1. This seems like something all teams can optimise for (some teams can make “x” more aggressive)
  2. Focuses on quality/ engagement - key aspects of a mature product

Where can this North star metric go wrong?

  1. Google search is a complex product with tough monetisation goals. There is a theoretical possibility of better monetisation w/ more ads on top.
  2. Given the volumes of Google search, investigating queries to keep this North Star going up can be very taxing
  3. This assumes a certain layout for search results - if we show a carousel followed by listings - what constitutes top “x” search results!

One question often asked is is a specific product area should have a North Star Metric if your company already has a North Star. You can track secondary metrics for sure but make sure you are always optimising for the primary metric. Sometimes, even the most leading indicators can take long term to show. For example, increasing engagement on stories from viewers could fit into the overall stories posted. However, an equation that establishes this should emerge to justify continuing to optimise for this metric. This becomes tricky if you are optimising for advertising. Potentially, adding more stories could decrease number of creators. Unless this does not self correct, this is likely to stop the production - consumption - monetisation cycle that social media looks at.

Another question is regarding adding check/ counter/ health metrics. These metrics usually do not qualify the North Star but you can add it to the dashboard or reports. Another technique which I have seen good success with is breaking the North Star into different segments. For instance, for our Instagram example, you could also add how does the North Star look for new creators and older creators, and even perhaps some geographies or influencers/ regular users. However, it is important to note that North Star stands on its own - that one metric we celebrate our progress and align our efforts towards.

Closing thoughts on North Star Metrics:

  1. When in doubt, pick an engagement metric
  2. Good North Stars usually focus on ‘specific customers’ vs ‘funnels’/ ‘transactions’ (eg: creators posting a story vs # of stories posted)
  3. Good North Stars are clear (eg: # of creators who post a story vs active creators)
  4. Averages usually make for poor North Star as they mask spikes of growth - your North Star should tell you instantly how you are doing
  5. Practice makes you perfect. Try thinking of North Stars for tougher products - Uber’s ride hailing, Google search, Android OS.

What are your best practices in picking a greater North Star? What did you think of this thread? If you liked this thread, consider bookmarking and sharing this.

Gratitude: Thank you Gokul and Manas for reviewing and discussing the early drafts of this post.

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