How to define inspiring North Star Metrics for your Product - Product Thoughts #130

Striking a balance between providing enough guidance and autonomy to a Product Team can feel like a daunting task. But defining and following through on a North Star Metric (NSM) can be an effective way to achieve just that.

Located somewhere between a Product's vision, strategy, and the quarterly goals, the North Star Metric aims not just to define an arbitrary KPI to chase. Instead, it's meant to be derived from the companies vision and mission, while capturing the most crucial success metric for the business. I won't get into the overlaps/differences of NSM and OKR today. That's for another newsletter.

Sean Ellis, founder of growthhackers.com and one of the early advocates of the NSM, defines it like this:

The North Star Metric 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. To uncover your North Star Metric, you must understand the value your most loyal customers get from using your product. Then you should try to quantify this value in a single metric. There may be more than one metric that works, but try to boil it down to a single NSM.

The biggest challenge for defining an effective NSM is to enrich a key KPI with an attribute which captures the value for *your* users while enabling the team actually to move it.

In the earlier days of iridion, we tried to work towards completed A/B tests by our customers. Unfortunately, we realized that there were too many factors at play to drive this metric, which we couldn't influence (like traffic and dependencies). Over time, we arrived at a parameter which was a bit more proxy-ish, but more accessible for us to work towards: Qualified ideas. While this was more like a lead metric didn't capture the full success experience we wanted to create for our clients, it was part of our core value proposition and easy for us to influence through product onboarding sequences and feature iterations.

I also used to work with a company a couple of years ago, where the initial North Star Metric for the product was Weekly Active Brokers using it. While this was technically correct, it lacked inspiration for the team to come up with new ideas for how to make the product more effective. So, we took a step back and looked at the overall vision, which then helped us to enrich the original metric with aspects which also captured how "enabled" the brokers were.

One of my favorite examples for North Star Metrics stems from Amplitude. They aim to improve their "Weekly Learning Users" (WLUs) and quantify this metric with three qualification criteria.

Re-visiting your company's or product's vision is one of the most effective ways of making your NSP more inspiring. The discussion around that might also bring some gaps in your products vision to light. This might feel like a lot of effort for just setting "a number," but the more inspirational and attainable your NSM is, the better it can help you to guide without sacrificing autonomy.

I'm curious to hear from you how NSM has worked for you and which challenges you faced during defining and monitoring them?

Have a great week and take care,

Tim

What I read last week

5 Principles of Human-First Products

Products today reinforce and take advantage of our basest emotions—especially feelings of inadequacy and fear of missing out or being left behind. They erode behaviors we once valued and that I would argue make us more human: independent thinking, deep consideration, and control over our actions. Products today don’t speak to our highest human nature. Technology has become first; humanity, second.

Cost of Product Failure

Most companies think it’s most expensive not to deliver products or to deliver them late (Cost of delay). If you really, really know what to deliver this is true. Unfortunately most times this is not the case - even if you think that everything is discovered before starting delivering. But what about the costs of delivering bad prepared or wrong products or features? What if everything is delivered and nobody uses it? What about the costs of starting unprepared and fail while implementing things?

The Product Leadership Career Ladder

As product managers, we fall in love with our products and customers, get emotional victories from market wins or technical achievements, nurture our teams, adopt a protective parental attitude. A role without our own products can sound unfulfilling.

Why we ditched two-week sprints for a better product development process

The length of each cycle is an intentional move away from the two-week sprint, which felt like an unending controlled crash of features into production, with too many check-ins, management overhead, and no room to step back and fix things. With cycles, we actually ship more. People feel less unnecessary rush, and with the extra time we feel more confident in what we choose to build. Not everything ships at the end of a cycle; we ship something when it’s ready. But by the end of each cycle the team will have reached some key strategic milestones.

I’m a Data Scientist and Here’s Why Quantitative Data Isn’t Enough

It’s important to note that there are occasions where it really doesn’t make sense to analyze data using some of the most common statistical methods. First, you might have just launched your product, or perhaps only have a prototype. And even if your product is in an advanced state, you might be adding new features that don’t exist yet. In these cases, it’s likely that you don’t quite have the sample sizes necessary for a rigorous quantitative analysis. Here, user research can help teams figure out if they’re on the right track, and guide them as they build towards the data-collection phase.

The Challenge Matrix

I believe the main success factor behind every great Product Manager is a healthy relationship with conflict. Our relationship with conflict impacts everything we do, from product discovery to stakeholder management, product ownership, and self-improvement. All these skills have a low ceiling if you're not able to recognize and reckon with conflict.

Product-led Companies – Why and How They Work

Product-led growth (PLG) is a term that has become pretty mainstream in SaaS circles, but some companies still miss out on the full potential of the concept because they think of it more as a pricing model or maybe a variation on the bottoms-up growth concept. Product-led growth is related to those things, but it’s also much more. It’s about product being the core DNA of your company, so much so that the default mode for solving problems—including growth challenges—is to figure out how to use the product to address whatever issue is at hand.

Give Your Research Skills Away: Why Coaching Product Teams Won’t Put You Out of a Job

Teaching customer engagement and research skills to product teams is a solution that many companies are turning to. Depending on the model and the context, research training programs may be popular, controversial, or both. When we approach them strategically, these programs can produce valid research, as well as foster respect for the discipline and free up embedded researchers to do more high-level work.

Product Thoughts is a weekly newsletter/digest I send out to over a thousand leaders in product, UX, and business every week. To learn more about previous editions and sign up for it, go to herbig.co/newsletter.