If you’ve ever sat in a leadership meeting and felt overwhelmed by dashboards, you’re not alone. I’ve witnessed it happen multiple times — teams wrestling through dozens of KPIs, weekly reports, and performance charts, each vying for its own share of attention. But in the midst of all the noise, the most important question usually goes unasked: what’s the single metric that informs us whether or not we’re really driving the business forward?
That’s where the concept of a North Star Metric (NSM) enters the equation.
Why Every Business Needs a North Star Metric
The phrase was coined in Silicon Valley, but the vision is much broader. First developed to enable rapidly growing tech firms to remain hyper-focused, a North Star Metric is a single, quantifiable metric that summarises the fundamental value your company provides to customers, that ultimately propels long-term, sustainable growth. It isn’t a product metric or a marketing KPI. It’s the pulse of your business.
And the clincher: having a clear NSM isn’t a nice-to-have. It’s a strategic imperative. Without it, companies risk spreading their resources thin, measuring everything but prioritising nothing. With it, alignment becomes better, decisions sharpen up, and teams — from the boardroom to the shop floor — all row in the same direction.
In an information-saturated world, the successful companies will be the ones that understand precisely what to concentrate on. Your North Star Metric serves to keep you on track.
What Exactly is a North Star Metric?
The North Star Metric represents the most vital indicator of your long-term business success. It’s your most critical metric that captures the value you’re delivering to your customers and, most importantly, the value that defines your sustainable growth. If there’s a single dial in the dashboard that matters the most, this is it.
To qualify as a North Star, a metric must do three things:
It has to be quantifiable — You have to be able to monitor it reliably in the long-term, in a clear and exact way.
It should embody customer value — It isn’t about what you care about internally; it’s about what really matters to the customer.
It should trend along with revenue growth — When this figure increases, your company should be expanding in a healthy, significant amount.
In other words, your NSM should reside at the intersection of what your clients desire and what propels your business forward.
Now it’s simple to mistake the NSM for other forms of metrics. A lot of businesses believe that they have discovered their North Star when in fact they have not. “Monthly revenue,” “website traffic,” “number of sales calls” — these may be valuable KPIs but tend to be too self-focused, or too narrow or too disconnected from real value for the customer.
The greatest North Star Metrics are those that are behaviour-based. They represent the way that customers use your service or product in a way that represents real, sustained value. Facebook’s NSM for several years was “Monthly Active Users”. Airbnb’s was “Nights Booked”. These are metrics that represent significant use, not clicks or impressions or transactions, but real, valuable use.
And let’s make it plain: this concept isn’t only for technology companies. Service companies, B2B consultancies, professional services, even universities — any organisation that produces value for the client can, and ought to, establish a North Star Metric. It makes clear what achievement ultimately means.
When selected properly, your NSM becomes more than a mere figure. As an indicator of analytics maturity, it becomes a decision-making lens, a team’s rallying cry, and a highly effective distraction guardrail.
The North Star Metric is not just a number — it’s a strategic decision about what your business is truly here to do.
NSM vs. OMTM: Don’t Mix These Up
I commonly notice companies conflate their NSM with the One Metric That Matters (OMTM), but although the names sound close to each other, the two have very different functions.
The North Star Metric acts as your strategic compass. It’s your long-term, always-on metric that should not change much through the passage of time — ideally for several years. It’s the continuous value your business is providing to customers and it’s inextricably connected to your expansion. It’s not performance this month or next quarter — it’s about the direction you’re headed.
The OMTM, in contrast, is a more tactical concept. First introduced in the book Lean Analytics, it describes a narrow metric for a given team to concentrate on for a specific time frame — usually two to six months. It’s intended to facilitate focused experimentation and quick learning. For example, a product team might track “activation rate” for a quarter, while a marketing team tracks “cost per qualified lead”.
Here’s the way I prefer to explain it:
- Your NSM is the place you’re headed — your beacon.
- Your OMTM is the subsequent signpost — the milestone along your path.
Both have their uses but in different altitudes. Using your OMTM as your NSM will frustrate your teams — you’re too broad. Using an OMTM as your NSM risks driving the whole company off in a here-today-gone-tomorrow priority.
Knowing the distinction ensures strategic alignment but also enables you to have agility on the team level. You have both — but do not get them confused.
Examples of Good North Star Metrics
One of the strongest means of comprehending what makes a good North Star Metric (NSM) is to examine how well-performing companies define theirs. These are not abstract goals or vanity metrics — they’re specific, quantifiable markers that indicate real customer value and sustainable growth.
Let’s examine a few examples in a variety of industries:
SaaS (e.g. Slack):
NSM: Number of weekly active teams
This extends to individual users. Slack realised that when entire teams use the service actively each week, they are then more inclined to remain on board, upgrade, and incorporate it into their workflow. It mirrors genuine value provided and has a close relationship to expansion.
Marketplace (e.g. Airbnb):
NSM: Evening bookings
Airbnb wants not only to have folks shopping through listings — it wants to have completed stays. “Nights booked” represents the whole value exchange between hosts and guests, and when it grows, the entire ecosystem wins.
Subscription service (e.g Spotify):
NSM: Listening hours for each user within a week
This creates deep engagement. The longer listeners spend listening, the more value they see — and the more likely to stay subscribed or recommend it to others.
B2B Consultancy:
NSM: Number of clients retained having currently active projects
Retention and project engagement in professional services are the strongest indicators of value delivery and client satisfaction, and are directly related to revenue health.
Healthcare Provider:
NSM: Number of improved health outcomes for the patient
In a service in which outcomes really do count, this measurement focuses organisational efforts, patient value (health), and future sustainability, particularly in outcome-based financing arrangements.
The common thread in all these? Each of the NSMS is behaviour-based, quantifiable, and strongly linked to the core value proposition of the company. It’s about what the customer receives, not about what the company does. These are only examples to inspire you, but your own NSM should be distinctly your own, influenced by your business model, your customer journey, and your engine of growth.
Why Defining Your NSM is Crucial
In my opinion, the value in having a North Star Metric isn’t so much about measurement as it’s about concentration. In a world in which leadership teams are overwhelmed by data, opinions, and changing priorities, the NSM serves as a strategic anchor. It clarifies the noise.
Above all, your NSM establishes alignment. When the whole organisation knows what success looks like — in a single clear, common metric — decision-making becomes quicker and more congruent. Teams start to self-organise towards outcomes that make a difference, not outputs that sound good in a performance review. It becomes much easier to decline distracting endeavours or ‘urgent’ tasks that do not drive the needle.
Secondly, a clear NSM serves as a prioritisation lens. Whether you’re assessing a potential new product feature, a marketing campaign, or even a hire — the question is: will this drive our North Star? If the answer is no, you have a solid justification to pass.
There is also a narrative benefit. A solid NSM facilitates the ability to convey your strategy — not only to internal teams but to investors, board members, as well as stakeholders. It reduces complexity. It provides people with something to unite behind.
I’ve found that the lack of a common metric for leadership results in a mess of KPI soup — everyone having their own departmental numbers to push, and no clear indication that the business as a whole is really moving forward. Morale tanks. Strategy wanders. Resources get wasted.
Creating an NSM is a forcing function. It requires leadership teams to ask some uncomfortable questions: What do our customers value most? How do we know that we’re delivering it? And how does that translate to sustainable growth? The clarity that results when you answer these questions is truly priceless.
If you’re serious about scaling deliberately, not merely speed, having a North Star Metric isn’t a nicety; it’s a must.
A Practical Framework for Uncovering Your NSM
So, you’re convinced about the need for a North Star Metric — but how do you really discover yours?
In my experience, most companies either complicate this process excessively or worse still select a term that sounds strategic but does not fulfill the fundamental criteria. It’s about adopting a structured and collaborative approach that breaks through internal bias and identifies what truly matters to the business and to customers.
I work with a simple but powerful process that I refer to as the VRC Framework — Value, Revenue, Clarity. It isn’t a spreadsheet exercise. It’s a conversation starter for leadership teams that wish to commit to outcomes as opposed to activity.
When you’re measuring everything, you’re prioritising nothing. A good North Star Metric gives focus, filters noise, and drives aligned growth.
Step 1: Identify Core Customer Value
Start by asking: What is the most fundamental value our product or service delivers to customers?
This isn’t what your marketing says you do. It’s not your mission statement. It’s the observable behaviour that signals customers are getting what they came for. In other words, what’s the thing they do when they’re genuinely getting value?
- For a language learning app, it might be “completed lessons per week”.
- For a managed IT service, it might be “number of resolved tickets within SLA”.
- For a financial adviser, it could be “number of client portfolios reviewed quarterly”.
Think behaviour, not belief.
Step 2: Map It to Revenue
Once you’ve identified a signal of customer value, ask: Does this behaviour lead to sustainable revenue growth?
If customers are doing more of this, are they:
- Renewing or repeating purchases?
- Referring others?
- Upgrading their service tier?
You need a causal relationship, not just a correlation. If your metric ticks the ‘value’ box but has no connection to the business model, it’s not your North Star — it’s a customer satisfaction measure.
For example, someone might like your app (value), but if they only use the free tier and never convert (no revenue impact), that’s a problem.
Step 3: Test for Clarity and Communication
This part is often overlooked. Your NSM needs to be intuitive, memorable, and broadly applicable across the business.
Ask yourself:
- Can you explain this metric in one sentence?
- Would everyone from your CFO to a new intern understand what it means?
- Can different departments see how their work contributes to it?
If it’s too technical or team-specific, it won’t stick. For example, “Average Session Length per Unique MAU Normalised by Churn Rate” might be precise, but it won’t unite anyone.
Your NSM should be simple enough to go on a slide — and powerful enough to drive board-level strategy.
Bonus Tip: Avoid the ‘Mirror Metric’ Trap
Be wary of choosing a metric that reflects your activity, not the customer’s experience. For instance, “number of emails sent” says nothing about whether customers opened, engaged with, or valued those emails.
Always orient around customer behaviour. That’s where the magic happens. In summary, to find your NSM, ask:
- What customer behaviour reflects real, delivered value?
- Does that behaviour correlate strongly with revenue growth?
- Can we clearly and consistently communicate it across the business?
If your answer to all three is a confident yes, you’ve probably found your North Star.
Your NSM should reflect the value your customer receives — not just the effort your team expends.
Common Mistakes to Avoid
Finding your North Star Metric is about as much about recognising what not to do as about selecting the right measure. I see businesses stumble over and over in the same few areas, and getting these right early can prevent much strategic drift down the line.
Selecting a vanity metric
Page views, app downloads, email opens — they’re big numbers, but numbers that don’t guarantee you’re delivering value or driving growth. Your NSM, or North-star Metric, needs to have an explicit bridge to both, or else it’s mere window dressing.
Confusing internal activity with customer value
This is an easy trap to fall into. Counts such as “calls made” or “number of features shipped” measure effort, not results. Your North Star Metric must always be externally oriented — what the customer does because of your efforts.
Choosing too broad (or too narrow) an item
“Revenue” is too broad. “Tier 3 markets’ daily active users on Feature X” is over-specific. Your NSM needs to occupy the middle ground: meaningful, measurable, and scalable.
Altering it too frequently
Your North Star Metric isn’t a KPI for each quarter. If you’re rotating it every couple of months, you haven’t yet found the right one — or you’re following trends, not creating strategy.
Making it an individual choice
This is not something that one department can dictate. It requires cross-functional input and leadership alignment to effectively fulfill its purpose.
Why the North Star Concept Still Matters in 2025
In 2025, it’s easier than ever to measure everything — yet harder than ever to know which things are important. Dashboards are clogged, teams are drowning in data, and strategic clarity is usually the first victim of growth. That’s why, in my view, the North Star Metric is more important than when the term first gained use in Silicon Valley.
In my opinion, clearly articulated NSM pierces the din. It establishes a point of commonality that bridges customer success with business success. It’s also an effective antidote to reactive leadership — the type that swivels in response to the loudest voice or the newest surge in some ego metric.
I have witnessed organizations being totally transformed simply because they clarified what they were actually attempting to shift. When leadership is all aligned around the one measuring stick, you don’t just achieve alignment, you get momentum.
And let’s make one thing clear: this is not about boiling your business down into a single number. It’s about raising the right number, the one which truly shows value creation. When that’s the goal, performance increases, silos disappear, and teams abandon motion for progress.
In today’s overwhelming world, focus is a strategic advantage. The North Star Metric delivers that focus.
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A Call to Action
If there’s one thing that I have learned, it’s this: businesses fail, not because they have little data, but because they have little focus. A North Star Metric is your strategic filter. It’s how you’re able to make needed investments, where you’re able to park, and where you’re able to simply ignore.
And here’s the catch: identifying your NSM doesn’t involve mimicking someone else. It’s about asking the tough questions that make your team realise what truly generates value. It requires honesty, teamwork, and open questioning of assumptions.
So, since you’re reading this far, here’s the question for you: What’s the single measure that best indicates your customer’s success — and drives your business forward when it’s pointing in the right direction?
Start right there.
And if you’re struggling with competing priorities, ambiguous KPIs or internal misalignment, I can certainly help you work through what your North Star could look like. Oftentimes, the greatest challenge is simply figuring out what not to measure.
