Product Management 101: #10 North Star Metric

What is a North Star Metric?

The North Star metric should provide evidence of a clear and direct relationship between your product’s problem and the degree to which it is solving it for your target market.

It is the single metric your team or company decides will be the one that best represents how well your product is performing in the market?(definition by ProductPlan).

A north star metic has usually the following?characteristics:

• Expresses value
• Represents vision & strategy
• Is a leading indicator
• Is actionable
• Is quantifiable

Usually the north star metric is measured by certain Product KPIs which might be tier 2 and tier 3 metrics.

The North Star Framework

So how do I actually define the right north star metric? You have to focus on your customer problem you want to solve and the product vision, so to say the envisioned solution state for the customer problem.?The product strategy describes the path to?reach the product vision.?The north star metric measures the degree to which the customer’s problem is solved?by your product.?This metric is the core metric showing your progress on how successful your product performs.

Your?north star metric must be derived from a true understanding of what action provides realized value to the customer.?This means that “Daily Active Users” or “Registered Users” are not good metrics?as they belong to the tier 3 metrics (vanity metrics). They?do not give you any meaningful information about what your customers value about your product.?When product teams fail to establish a direct connection between customer value and the north star metric, they risk leading their business along the wrong alley.

The?north star metric is usually measured as a multiplication of several Product KPIs, most times a combination of reach, engagement and frequency:

Reach:?Number of relevant users

Engagement:?A certain action

Frequency:?Number of repetitions of the action taken

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