North Star Metric Finder

The North Star Metric is the single number that best reflects the value your product delivers to customers. It's not revenue (that's a business outcome). It's the usage metric that, when it grows, means customers are getting what they came for.

Before You Start

Ask the user:

1. What value does your product deliver? — In one sentence, why do customers use it?
2. Business model — How do you make money?
3. Current metrics — What do you track today? What feels closest to a NSM?
4. Product stage — Pre-PMF vs. growth vs. scale changes the right NSM.

Selection Process

Step 1: Identify the Core Value

The North Star should measure value delivered, not value extracted:

| Product Type | Value Delivered | Example NSM | |-------------|----------------|-------------| | Communication | Messages exchanged | Messages sent per week | | Marketplace | Successful transactions | Transactions completed per week | | SaaS tool | Work accomplished | Tasks completed per week | | Content | Engagement with content | Minutes of content consumed per day | | Fintech | Money managed | Dollars transacted per month |

Step 2: Test Against Criteria

A good North Star Metric must pass ALL of these:

1. Measures value to customer — When it goes up, customers are happier (not just the business). Revenue growth without NSM growth means you're extracting, not creating.
2. Leading indicator of revenue — It correlates with future revenue growth. If NSM grows but revenue doesn't follow, the metric is wrong.
3. Reflects product strategy — It captures what's unique about YOUR approach to the problem. Two competitors in the same space might have different NSMs.
4. Actionable by the product team — The team can influence it through product decisions. If it's purely driven by marketing or sales, it's not a product NSM.
5. Understandable — Anyone in the company can explain what it means and why it matters. If you need a paragraph to define it, simplify.

Step 3: Define the Input Metrics

The NSM is an output. Identify 3-5 input metrics that drive it:

North Star: [Metric]
├── Input 1: [What drives NSM — team can directly influence]
├── Input 2: [What drives NSM]
├── Input 3: [What drives NSM]
└── Counter-metric: [What we must NOT sacrifice to grow NSM]

The counter-metric is critical. If your NSM is "messages sent per week," your counter-metric might be "% of messages that receive a reply." Without it, you could game the NSM with spam-like features.

Step 4: Validate with Data

Before committing, check:

• Does this metric correlate with retention? (Users with high NSM stay longer)
• Does it correlate with revenue? (Users with high NSM pay more/upgrade)
• Is it sensitive to product changes? (When you ship improvements, does it move?)
• Does it have enough variance to be useful? (If everyone is at the same level, it won't help you prioritize)

Step 5: Set the Target

Use the format: "[Metric] = [Current] → [Target] by [Date]"

Ground the target in:

• Historical growth rate
• Benchmark data from similar products
• What would need to be true for the business to hit its goals

Output

# North Star Metric — [Product Name]

## Our North Star
**Metric:** [precise definition]
**Current:** [value]
**Target:** [value] by [date]
**Why this metric:** [2-3 sentences connecting it to customer value]

## Input Metrics
| Input | Definition | Current | Target | Owner |
|-------|-----------|---------|--------|-------|
| [input] | [definition] | [X] | [Y] | [team] |

## Counter-Metric
**Metric:** [what we won't sacrifice]
**Threshold:** [minimum acceptable level]

## Validation
- Retention correlation: [data]
- Revenue correlation: [data]
- Sensitivity to product changes: [evidence]

## How We'll Use It
- **Weekly:** [What we check]
- **Monthly:** [What we review]
- **Quarterly:** [How it informs planning]

Save as NORTH-STAR-[product-name].md.