Since the early 2010s, the “North Star” has been increasingly discussed in boardrooms around the world. This is not the result of a sudden interest in astronomy. Rather, the concept of a North Star metric has emerged as an effective way for organizations to measure their customer value.
Originally popularized by companies in Silicon Valley, the North Star metric has become an important tool that allows companies and teams to streamline their focus and align to a singular guiding purpose. It is a useful means of bringing employees together around a common objective, ensuring every person is measuring the success of their differing roles and work in the same way.
While a North Star metric is often companywide, product teams across many sectors are using it to guide the direction of the product development journey. Having a defined metric ensures that work is always geared toward meeting a customer need and that the goals of products are aligned with the goals of the business overall.
A workshop is an effective way of developing or refining the North Star metric. Coming together to share ideas and strategies fosters collaboration, coherence, and a common vision. It also ensures the team feels ownership over the resulting metric.
Designing a solid, tailored structure will ensure the workshop has impact and leads to the creation of a strong metric. If you’ve never facilitated or participated in a North Star metric workshop, or you simply want to refine the process, these five pointers will help you derive maximum value from a session.
1. Select the Right People to Participate … but Keep It Small
To create an appropriate North Star metric, you’ll need to have the relevant people present at the workshop. This includes stakeholders within your team and outside of it. Andrew Miller, Vice President of Growth Marketing for social media management company Agorapulse, believes that the group should comprise the individuals who will influence or be accountable for achieving the North Star metric.
“Even if the metric is product team-specific, I always encourage interdepartmental communication, as the primary focus of one team can have a dramatic impact on other teams, both in a positive and negative way,” he says. “Besides the core product stakeholders, I would invite key decision-makers from marketing and potentially sales.”
John Cutler, Head of Product Education at Amplitude, which specializes in product analytics, agrees: “It’s helpful to have people from outside the product team involved because everyone has beliefs about the business that are important, and people will have different information about the customers.
“Take sales, for example. Even if they are observers to the process, they are representing the idea. And if they look at the North Star metric and can’t wrap their head around it, that is a sign that something needs to be unearthed.”
Miller adds: “It is important, however, that the number of participants is still relatively small; I like to keep it around five or six people.” A small group allows for participants to engage with each other in a more intimate way, allowing all voices to be heard while keeping the length of the workshop to two to three hours.
2. Ensure Familiarity With the North Star Framework
While creating a North Star metric may be standard practice for employees in Silicon Valley, not everyone on your team will be familiar with the framework and what it contains. Providing a detailed overview at the start of the session can be helpful and will ensure everyone participating is clear on the aim of the workshop and what you want to get out of it.
The framework consists of three main elements. These are the North Star metric itself; the inputs: the key actions that contribute to the metric; and the work: the day-to-day activities that feed into the inputs. There are generally four input dimensions: breadth, frequency, depth, and efficiency. Breadth could be the number of users, for example; frequency would be how often they engage; depth would be the level of engagement; and efficiency would be the pace of the interaction.
As well as defining the North Star metric, the workshop should also help to define the inputs, Miller says: “There should be clear owners for each input. The owners of each input should work to build out tactical efforts that help ensure that the North Star metric is being achieved. If efforts aren’t aligned with the metric, then they should be questioned and potentially stopped.”
It may be easier for the group to work backward, thinking about the work and the inputs first, then using those to inform the North Star metric.
3. Reiterate Your Product Vision
Your metric will be closely tied to your product vision, so you’ll need to offer an opportunity for participants to review it. The product vision statement should contain an indication of the product value.
Sean Ellis, a growth hacking expert and advocate of the North Star metric, says: “To uncover your North Star metric, you must understand the value your most loyal customers get from using your product.”
Govind Kumar, Director of Product Development for LoginRadius, a customer identity and access management platform, explains: “Your product vision always reflects the value you will deliver to customers. The North Star metric reflects the customer value and shows progress [toward] achieving the vision.
“Let’s take the example of Amazon. Its vision statement is ‘to be Earth’s most [customer-centric] company … to help consumers find, discover and buy anything.’ Its North Star metric is the number of purchases per month. Clearly, the metric is showing their progress [toward] their vision.”
4. Outline What Makes a Good North Star Metric
If your colleagues are new to the North Star concept, it might be useful to provide examples from well-known organizations. Airbnb’s metric is nights booked, for example; Facebook’s is monthly active users. The North Star metric for product teams will vary according to the nature of the business or industry, but there are several common characteristics of a good metric.
Kumar says a good metric should be “independent of external factors.” With a vacation booking platform, for example, customers’ travel experience can be influenced by variables—such as weather or flight delays—that are beyond a company’s control. “Thus, the number of five-star ratings per month is not a good metric,” he says.
A good North Star metric will reflect growth, which means it should be linked to and drive revenue—but it should not be based on it. Having revenue as a metric means you could end up focusing on how much customers are paying for the product, rather than the value they are deriving from it.
The North Star metric must be measurable, however, Kumar says: “For LoginRadius, the value of the product is in how easily a customer can implement it, but this can’t be measured. We needed to find a better way: What is the average time of starting an end user’s authentication activities after creating the app on LoginRadius?”
Ideally, the metric should be continuously measured, says Cutler: “So you can look at it on any given day, but small changes in it shouldn’t bother you; if you’re stressing about it every hour, that means it’s a little fragile.”
During the workshop, your team should consider how you will monitor and report progress, and what data will be relevant in doing so. There are several analytics tools—such as Amplitude, Pendo, and Mixpanel—available to help you track your metric.
It’s important to remember that the North Star metric is also a tool capable of galvanizing your team. “You don’t want it to be a vanity metric, but there is this inspirational element to the North Star: People are motivated when they see it go up,” Cutler says.
5. Use Engaging Tasks to Inspire the Group
Structure the workshop as you would any other, allocating time for both individual work and group discussion. As the workshop lead, you should ensure you have gathered relevant materials and conducted research in preparation, on both the company and the customer. During the workshop, there are several tasks and exercises you can employ to inspire your team to create a strong North Star metric.
If a core value statement for your product doesn’t exist already, you should have participants create one. It may be that you need to identify the different value exchanges in the product, says Cutler: “A customer will come in and invest their time and energy, but when does the tide shift? When do they start getting energy back from the product?
“Another thing would be to map out the customer journey and ask the team ‘What behavior really seems to encapsulate that leading indicator that this is going to be a customer for life? What are they doing?’”
Your team also needs to understand exactly how the product engages customers. There are three engagement ‘games’ to choose from: attention, transaction, and productivity. If your product is in the attention game, you are trying to maximize the time the user spends using the product; the transaction game means your product is helping customers make a purchase; in the productivity game, the product is enabling customers to complete a task. This is an important distinction because the intent of the product should be echoed in the North Star metric. You should encourage group discussion to determine which engagement category your product falls into.
Here’s a task that can facilitate thoughtful discussion about what makes a good metric: Have each participant imagine they are on the product team for a well-known brand in a different sector and run through the process, creating hypothetical inputs and a metric. Then, when it comes to creating one for your product, they will be comfortable with the framework and able to apply it more easily.
Stay the Course
The purpose of the session is to provide clarity and direction, so if your North Star workshop has been successful, the end result should be a well-articulated statement that defines your metric. You may want to review the metric after a period of time, to check that it is being measured in a meaningful way and that the team has confidence in it. Ultimately, your product team members should walk away from the workshop with a firm understanding of what the metric means and how their actions will help work toward it.
Understanding the basics
A North Star metric is a means of measuring the value that a product provides a customer, through which teams can monitor growth and success.
A good North Star metric is measurable, independent of external factors, and linked to but not based on revenue.
A North Star workshop is a group session dedicated to developing a metric for the product team. It should bring together the individuals who will influence or have an impact on the metric to share their thoughts and ideas around the value of the product to the customer.