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How a North Star Metric Can Guide Stellar Business Performance [10]

[The North Star Metric (NSM) is the single metric that best captures the core value that your product delivers to customers. Optimizing your efforts to grow this metric is key to driving sustainable growth across your full customer base.]  Sean Ellis


           A new and powerful measure that impacts marketing performance (revenue generation and profits) is the North Star Metric (NSM), born in Silicon Valley. Examples of North Star Metrics include Facebook’s daily active users and Airbnb’s night bookings for hosts and guests. An NSM is a single item metric that calculates the overall value that your products and services deliver to customers. Companies using this innovative approach must identify sub-variables that can positively move this measure – e.g., inquiries, user signups, new user activations, customer journey assessments and engagement and retention measures (Ellis, 2017).
Bucky Barlow brilliantly explains this idea: “Like its namesake Polaris in the sky, your North Star Metric is the one that you can count on to help make your way home. When you look up at the sky, Polaris isn’t the first star you see. It’s not the brightest star in the sky either. But because it’s located almost directly above the North Pole, you can use it to navigate effectively.”  He adds three key points: 1) a NSM metric drives a magical, “a-ha” moment from the customer that drives sustainable growth, 2) it’s likely that your NSM isn’t a flashy number such as Facebook likes or Twitter followers and 3) a focus on a single number can energize an organization as all employees know what needs to be accomplished (Barlow, 2017). 
          Since we can’t measure everything, the challenge is to focus on those metrics that truly impact business performance. As an example, a travel provider in the time share industry concentrated on four functional areas -- operations, production, customer service and marketing/ business development. For the marketing department, the most important measure dealt with pitch-rate conversion of weekly unit purchases – sales call to sales close ratio; the objective was to improve from one-in-seven prospect closes to one-in-six. This key measure was their North Star metric.
The North Star metric can be thought of as your Most Important Thing (MIT). For Hubspot, this is providing abundant killer content for Marketer Marys and Owner Ollies in the B2B marketspace. For Go Daddy, its MIT is website service usage by small and mid-sized businesses. What is the one true metric that is the basis for your business success (or failure)?                         
Ellis, S. (2017). What is a North Star metric?, June 5, https://growthhackers.com/articles/north-star-metric/  
            Barlow, B. (2017). What, why, how: the North Star metric, September 22, 
https://beintheknow.co/north-star-metric/


This blog post is the 10th in a series extracted from Superior Customer Value – Finding and Keeping Customers in the Now Economy, 4th Ed. (2019, Routledge Publishing/ Taylor & Francis). For further information, contact Art Weinstein at artweinstein9@gmail.com , 954-309-0901, www.artweinstein.com .    


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