North Star Metric
A single metric that best captures the core value that a product or company delivers to customers.
Definition
The North Star Metric is the key measure that represents the value a company creates for customers. It serves as a guiding light for all product decisions and aligns teams around what matters most for long-term success.
Characteristics of Good North Star Metrics
Customer Value
Directly reflects value delivered to customers
Business Growth
Correlates with revenue and business success
Actionable
Teams can influence through their work
Measurable
Can be tracked and reported regularly
Examples by Industry
- Social Media: Daily/Monthly Active Users
- E-commerce: Number of purchases or GMV
- SaaS: Weekly Active Users or revenue
- Marketplace: Number of successful transactions
- Streaming: Hours of content consumed
- Messaging: Messages sent per user
Real-World Example
Airbnb: Nights Booked
Represents value for both hosts (earning money) and guests (finding accommodation), while directly driving Airbnb's revenue growth.