Do you know what your North Star metric is? If not, it’s time to find out. Your North Star metric is the single most important metric that drives the growth of your business. It’s the metric that all of your other metrics should be aligned with, and it’s what you should focus on above all else. In this article, we’ll explore what a North Star metric is, how to find it, and provide some B2B and B2C case studies to illustrate its importance.
What is a North Star metric?
Your North Star metric is the one metric that matters most to your business. It’s the metric that drives the growth of your business and is aligned with your company’s mission and goals. While many businesses have multiple metrics they track, the North Star metric is the one that should always be the focus. It’s the guiding light that helps you make important decisions about the direction of your business.
How to find your North Star metric
Finding your North Star metric can be a challenging task, but it’s essential for the growth and success of your business. Here are some steps to help you find it:
- Start with your business goals: Look at your company’s mission and goals. What is the ultimate goal of your business? How do you measure success? Use these as a starting point to identify potential North Star metrics.
- Identify your key business drivers: What are the key drivers that impact your business’s success? These could be things like customer acquisition, customer retention, revenue, or product usage. Consider which of these drivers has the most significant impact on your business’s growth.
- Determine the correlation between drivers and business goals: Once you’ve identified your key drivers, consider how they relate to your business goals. Which driver has the most significant impact on your ability to achieve your business goals?
- Evaluate potential North Star metrics: Based on the above steps, evaluate which metrics could be your North Star metric. Consider which metric is most aligned with your business goals, key drivers, and is most likely to drive growth.
B2B case studies
Here are three examples of B2B companies that have identified their North Star metric and used it to drive growth:
Hubspot: Monthly Active Users (MAUs)
Hubspot is an inbound marketing and sales platform that helps companies attract visitors, convert leads, and close customers. Their North Star metric is the number of monthly active users (MAUs). They found that focusing on increasing MAUs led to significant growth in other areas, such as customer retention and revenue.
To achieve their North Star metric, Hubspot focused on improving user engagement and creating a better user experience. They conducted extensive user research and implemented changes to their platform based on user feedback. This resulted in a 48% increase in MAUs, which in turn led to a 50% increase in customer retention and a 70% increase in annual recurring revenue.
Dropbox: Number of Users Completing First File Upload
Dropbox is a cloud-based file storage and sharing service that helps individuals and businesses keep their files safe and accessible. Their North Star metric is the number of users who complete their first file upload. They found that this metric was a strong indicator of user engagement and eventual conversion to paid users.
To encourage users to complete their first file upload, Dropbox implemented a series of targeted email campaigns and in-app notifications. They also made changes to their onboarding process to make it more user-friendly. As a result, Dropbox saw a 60% increase in the number of users who completed their first file upload, leading to a significant increase in revenue.
Salesforce: Daily Active Users (DAUs)
Salesforce is a cloud-based customer relationship management (CRM) platform that helps businesses manage their sales, marketing, and customer service activities. Their North Star metric is the number of daily active users (DAUs) on their platform. They found that increasing DAUs led to increased customer engagement and retention.
To increase their DAUs, Salesforce focused on creating a better user experience and making their platform more user-friendly. They also implemented a series of targeted email campaigns and in-app notifications to encourage users to engage with their platform on a daily basis. As a result, Salesforce saw a 25% increase in DAUs, which led to a 35% increase in customer retention and a 40% increase in revenue.
B2C case studies
Here are three examples of B2C companies that have identified their North Star metric and used it to drive growth:
Netflix: Monthly Active Users (MAUs)
Netflix’s North Star metric is MAUs. This metric helps Netflix track how many people are actively using the platform and, more importantly, how engaged they are with the content. By measuring MAUs, Netflix can identify which content is most popular and use that data to inform future production decisions.
Airbnb: Nights Booked
Airbnb’s North Star metric is the number of nights booked on the platform. This metric helps Airbnb understand how much value the platform is providing to its users. By tracking the number of nights booked, Airbnb can identify trends and make informed decisions about how to improve the user experience.
Peloton: Monthly Workouts Per User
Peloton’s North Star metric is the average number of workouts per user per month. This metric helps Peloton track user engagement and retention. By measuring the number of workouts per user, Peloton can identify which features and content are resonating with its users and use that data to improve the user experience.
In conclusion, identifying your North Star metric is crucial for achieving sustainable growth. By focusing on a single metric that aligns with your company’s goals and values, you can ensure that all efforts are working towards a common objective. Remember, the North Star metric is not just a number, it’s a philosophy that should guide all decision-making processes. So, take the time to find your North Star metric and use it to drive your company’s growth.