North Star Metric : Tech Simplified
What is a North star Metric ?
Identifying a North Star metric is the key to predicting long-term success for a company. A metric must be revenue-generating, reflect customer value, and measure progress in order to qualify as a “North Star.”
Approach to decide a North star Metric
To find their North Star metric, companies must decide what is truly essential to the business, Prioritizing them and Encapsulating all the key factors would help building a metric hierarchy with the North Star metric on top of the pyramid.
For many teams, Core pillars are making customers happy, generating profit, and measuring progress toward those goals. All these goes hand in hand.
Can we have more than one North Star Metric
The “one key metric” idea is useful to simplify communication across the business but is often not enough. Most large companies have complex ecosystems and are trying to find the optimum balance between 1-3 core product metrics. Every team needs their own specific goal that drives the product organization’s north star forward.
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Examples of North Star metrics.
1) E-Commerce – Flipkart Amazon
Weekly number of first-time customers.
Value of daily purchases.
Customer lifetime value (CLV).
2) Consumer tech -WhatsApp, Instagram
Number of daily active users (DAU).
Number of messages sent per day.
Retention.
3) Media – Netflix , Hulu
Signups and retention.
Number of daily active visitors.
Total watch time.
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