The North Star Metric is a metric for retention created by Sean Ellis (from GrowthHackers). In this presentation we show what is a North Star Metric with examples like the Facebook North Star Metric, Subway North Star Metric or AirBnB North Star Metric, and in deep detail. We also provide a simple framework for you to discover and implement your North Star Metric.
3. Yourcoreexperience
definesyourcore
metric.
Once you know what your core experience is, you are able to quantify it.
Rewiring it as a North Star Metric, you basically create a guiding light
to lead recently-acquired customers into becoming loyal customers.
7. Subway
Question: You mentioned that finding “the metrics that matter”
should center on the metric that matters. What is Subway’s?
Chad Sanderson: There are a few: the number of purchasers,
revenue per visitor, and elements of loyalty and time. We don’t
want to just maximize what people are buying right now; we want
to maximize how frequently they come back over weeks and
weeks. Our ‘metric that matters’ is a combination of all of those
elements; that’s our North Star.
NorthStar:
Numberofpurchasers
Revenuepervisitor
Elementsofloyalty
Elementsoftime
toimproveHowfrequentlytheycomeback.
O'Brien, Mike. “Website Conversions and the 'North Star' Metric: Q+A with
Subway's Chad Sanderson.” ClickZ, ClickZ, 19 Dec. 2017,
www.clickz.com/website-conversions-north-star-metric-qa-subways-
chad-sanderson/203506/.
12. Leading and lagging
indicators
In performance management we often talk about “lagging” and
“leading” indicators. But what do they mean exactly?
Lagging indicators are typically output. Easy to measure, but hard
to improve or influence. For example, the number of accidents in a
construction site is a lagging indicator of safety. More closely
related: a lagging indicator is revenue… but what brings revenue?
Leading indicators are typically input. Hard to measure, easy to
influence. A leading indicator is a measurement that predicts
something else. For instance, the number of people with safety hats
on a construction site is a leading indicator of safety level. A closer
example, now, is to measure number of innovation projects in house
and compare it to the lagging indicator, revenue.
Der Poel, Karen Van. “Lagging and Leading Indicators.” Lagging and Leading Indicators | KPI Library, KPI Library / Mirror42, 2012, kpilibrary.com/topics/lagging-and-leading-indicators.
Lead and Lag Indicators. Intrafocus, www.intrafocus.com/lead-and-lag-indicators/.
14. There is no point in acquire customers for 100€ if they
leave before spending 50€.
There is no point in creating a referral campaign if the
ones who join leave after a week.
There is no point in people buying, but not using —
nor coming back for more.
TheNorthStarisall
aboutretention.
15. Facebook
North Star: Number of users
adding 7 friends in the first 10
days
The experience of Facebook only makes
sense when the user has friends in it.
Lagging indicator: “Active users”
18. The value loyal customers
see: using retention as the
original compound of your
North Star
“To uncover your North Star Metric you must understand the value
your most loyal customers get from using your product”, states Sean
Ellis in his seminal Medium article. The emphasis on loyal is key.
Probably your service or product provide various experiences and
benefits to your customers.
In order to identify your North Star — that is, the metric that can
take you to your a long-lasting and profitable relationship with your
customers — you must first isolate what makes your most loyal
customers different from others.
What are they getting from your product that others are not?
What are they valuing so much that they keep coming back to
you?
Ellis, Sean. “What Is a North Star Metric?” GrowthHackers Blog, GrowthHackers, 5 June 2017, blog.growthhackers.com/what-is-a-north-star-metric-b31a8512923f.
19. Finally,yourNorth
StarMetricshould
bepartofyour
experimentation
plan.
Vision
sprint
Experience
proposition
Basic KPI
setting
Team meeting:
design
experiment
Experiment runs
t runs
Results on
knowledge
base
Team meeting
(1h)
Define North Star Metric & KPIs
Experiment runs
Results on
Knowledge
Base
Team
meeting
Experiment
runs
Experimentation is an essential part of businesses today. They will
help you find product/market fit, fix usability problems, increase
onboarding and revenue and continuously improve your business
until you reach your design maxima. Ignoring experiments is
investing blindly and, in most cases, losing money.
If you are used to them, just apply your North Star as a secondary
KPI. With time, you will be able to embody it as your overarching KPI
throughout all experiments, and a clear way to overrule those who
are harming the North metrics.
20. Finally,yourNorth
StarMetricshould
bepartofyour
experimentation
plan.ASAP.
Vision
sprint
Experience
proposition
Basic KPI
setting
Team meeting:
design
experiment
Experiment runs
t runs
Results on
knowledge
base
Team meeting
(1h)
Define North Star Metric & KPIs
Experiment runs
Results on
Knowledge
Base
Team
meeting
Experiment
runs
If you are new to experiments, pick up the pace. Formulate your new
idea into something testable — and measure the outcomes with
simple KPIs in connection to the North Star. Does it correlate with
retention? Does it generate loyal new customers? Those are simple
ways to start.
21. Who’swithyou?
It used to be that change would happened after big green lights
were turned on, and big budgets allocated to big projects, and
things would move slowly and (hopefully) steadily.
That’s not the case in today’s lean and data-driven businesses. The
best way to get people to onboard you project is to make it happen,
make it succeed, and create a template that is easy to assimilate
and start.
You have the template, right here. Put your plan in practice, and
share with colleagues and people who care. Once everyone is on
the same page, the impact of having a North Star in place gets even
bigger, more measurable — and the pioneers come to the spotlight.
22. In a nutshell, applying
a North Star metric
goes like:
Experience at the core.
Identify the core experience
your loyal customers value
the most
Who else? Mobilise teams
so that performance is
evaluated across silos by the
same metric. Once the stars
are aligned, the magic
happens.
Stardust. Find the leading
indicator that most closely
relate to the experience. You
can combine with further
indicators, too. Set up a
manual sheet, a DataStudio
dashboard or an Analytics
report to keep track of it.
Create an experiment plan.
Measure your North Star
now, pair it with a lagging
indicator (such as revenue
and retention).
Now and then. Measure
indicators before and after
the implementation of each
of your experiments
You can even assess
experience satisfaction
alone, using a number of
proxies or leading indicators.
Similarly, do it now, and later.
23. ReadmoreonhowtodiscoverandapplyyourNorth
Starmetrictobusinessgrowth.Downloadtemplates,
designtoolsandotherfreematerials.
Digitalist.global/Talks
Der Poel, Karen Van. “Lagging and Leading Indicators.” Lagging and Leading Indicators |
KPI Library, KPI Library / Mirror42, 2012, kpilibrary.com/topics/lagging-and-leading-
indicators.
Ellis, Sean, and Morgan Brown. Hacking Growth: How Today's Fastest-Growing
Companies Drive Breakout Success. Crown Business, 2017.
Ellis, Sean. “What Is a North Star Metric?” GrowthHackers Blog, GrowthHackers, 5 June
2017, blog.growthhackers.com/what-is-a-north-star-metric-b31a8512923f.
Lead and Lag Indicators. Intrafocus, www.intrafocus.com/lead-and-lag-indicators/.
O'Brien, Mike. “Website Conversions and the 'North Star' Metric: Q+A with Subway's Chad
Sanderson.” ClickZ, ClickZ, 19 Dec. 2017, www.clickz.com/website-conversions-north-star-
metric-qa-subways-chad-sanderson/203506/.
Ries, Eric. The Startup Way How Modern Companies Use Entrepreneurial Management
to Transform Culture and Drive Long-Term Growth. Penguin Random House LLC, 2017.
Skok, David. “What's Your TRUE Customer Lifetime Value (LTV)? – DCF Provides the
Answer.” For Entrepreneurs, 21 Feb. 2017, www.forentrepreneurs.com/ltv/.
Sources
SérgioTavares,ph.D.
LeadConsumerScientistatDigitalist
sergio.tavares@digitalistgroup.com
Digitalist.global