nandanosql Purpose
Define the single metric that best measures the core value your product delivers. A good North Star Metric (NSM) aligns the entire company around customer value, predicts long-term business success, and decomposes into actionable input metrics teams can influence.
Key Concepts
What Makes a Good NSM
| Criteria | ✅ Good | ❌ Bad |
|---|---|---|
| Measures value | Value delivered to customer | Revenue (internal metric) |
| Predictive | Precedes revenue growth | Lagging indicator |
| Actionable | Teams can influence it | Out of their control |
| Simple | One number, easy to explain | Composite index |
| Leading | Early signal of success | Only visible after the fact |
NSM Decomposition Tree
North Star Metric
├── Input Metric 1 (Breadth: # of users reaching value)
├── Input Metric 2 (Depth: frequency of value delivery)
└── Input Metric 3 (Efficiency: speed to value)
Application
Step 1: Identify the Core Value
**What is the core value your product delivers?**
[In one sentence, what does the user "get" from your product?]
**Game:** [What type of value game are you playing?]
- [ ] Attention — Time spent (social, media, entertainment)
- [ ] Transaction — Purchases or exchanges completed
- [ ] Productivity — Tasks completed or time saved
- [ ] Network — Connections made or interactions enabled
Step 2: Define the NSM
**North Star Metric:** [Name]
**Definition:** [Precise definition — what counts, what doesn't]
**Current value:** [Baseline]
**Target:** [Where you want it to be and by when]
**Why this metric:**
- It measures value to the customer because: [reason]
- It predicts revenue because: [reason]
- Teams can influence it because: [reason]
Step 3: Decompose into Input Metrics
**Input Metrics:**
| Input Metric | Owner | Current | Target | How to Move It |
|-------------|-------|---------|--------|---------------|
| [Metric 1] | [Team] | [#] | [#] | [Key lever] |
| [Metric 2] | [Team] | [#] | [#] | [Key lever] |
| [Metric 3] | [Team] | [#] | [#] | [Key lever] |
Examples
✅ Good Examples
| Product | NSM | Why It Works |
|---|---|---|
| Spotify | Time spent listening | Measures value delivered to user |
| Airbnb | Nights booked | Measures value exchange |
| Slack | Messages sent per user per week | Measures engagement depth |
| Salesforce | Records created/updated | Measures productivity |
❌ Bad Examples
| Metric | Problem |
|---|---|
| Revenue | Lagging, internal-facing, doesn't measure value |
| # of signups | Vanity — doesn't ensure value delivery |
| Page views | Not connected to value for most products |
| NPS | Lagging, infrequent, not actionable daily |
Quality Rubric
| Dimension | 0 | 1 | 2 |
|---|---|---|---|
| Value Proxy | Revenue/vanity metric | Related to value but indirect | Directly measures value delivery |
| Actionability | Can't influence | Some levers | Clear input metrics with owners |
| Simplicity | Composite/index | Clear but needs explanation | One number, instantly understood |
| Leading | Lagging indicator | Concurrent | Leading indicator of growth |
| Decomposition | NSM only | Some input metrics | Full tree with owners + targets |
Common Pitfalls
Pitfall 1: Revenue as NSM
Fix: Revenue is the outcome of delivering value, not the value itself. Find what drives revenue by asking: "What value did the customer get that made them pay?"
Pitfall 2: Metric That Can Be Gamed
Fix: "Messages sent" could be gamed by bots. Add quality gates: "Messages in threads with 2+ participants."
References
Related Skills
skills/strategy/product-vision-statement/SKILL.md— NSM measures progress toward visionskills/strategy/okr-framework/SKILL.md— NSM often becomes a company-level key resultskills/analytics/funnel-analysis/SKILL.md— Track NSM through the funnel
External Frameworks
- Sean Ellis, Hacking Growth — North Star Metric concept
- Amplitude's North Star Playbook
Skill type: Component Domain: Strategy & Vision