Monthly Active Customers, Monthly Recurring Revenue, Daily Active Users, Customer Lifetime Value, Time Per Visit, Daily Sales Volume, Completion Rate and Net Promoters Score all sound very random when grouped together, but when you look at them independently they can all be classed as North Star metrics.
I first learnt about the concept of a North Star metric in 2017 from a Growth Hacker article posted by Sean Ellis titled What is a North Star Metric? It wasn’t long after this that I joined The Royal Mint and began to learn what their North Star Metrics were.
So, what are North Star Metrics and why are they so important? If we think back to that little town of Bethlehem and consider a famous story about three kings and what they did to find the baby Jesus, that’s exactly what North Star metrics do for product teams.
They act as a guiding beacon for success along a somewhat complex journey of tasks, impediments and hurdles. With a single unit of measure governing the successful performance of a product it provides consistent focus for the result of a product team’s work and a rock solid point of discussion for stakeholders.
I’ve spent the majority of my 20+ years working in online applications, predominantly websites, mobile first web apps and a handful of native apps. My work usually sits in the D2C ecommerce space, be that ticket sales or product sales. If we consider those sectors they sound very similar, but having understood and worked towards North Stars in organisations I’ve seen many variants including Monthly Ticket Sales, Net Promoters Score, Customer LifeTime Value and many others banded about depending on the businesses focus.
What I’ve come to understand is that the product owner should be the one who defines which star to follow, this will be specifically around the current objective for their product, and usually agreed alongside product stakeholders. Because of this close alignment it’s our role to ensure that it’s closely linked to the overall business strategy, this is core to our role as product owners.
In larger organisations, multiple product owners will have different north stars, this is specifically true as they will be working on different products or areas of a much larger product such as a website. For example customer on-boarding, in-site search and purchase path will take their place in a bigger application, but for the product teams working on one of those specific areas is imperative that a focus is given on performance on the objective for their product area.
Over the years I’ve tried and tested various methods of reporting multiple performance metrics collating them through weighting and outputting single north star measure, but without a doubt you can guarantee all that does is detract and muddy the focus for the product owner and the subsequent team actioning the next iteration and the delivery of the product. Staying focused on that KPI that overarches the current objective is key.
For those more senior roles within a business, there may be specific north stars that form or culminate the results of granular KPIs. In my experience these are usually focused on two areas; financials (Gross Profit, Net Profit, Customer Lifetime Value etc.) and customer (NPS, CSAT, CES etc.) focusing on longer term performance of a business or organisation.
Product objectives can change depending on the vision, backlog item etc., and therefore so can the North Star. In situations like this I believe it’s important not to forget, there was a reason a metric was followed as a performance indicator in the beginning and will therefore make good solid additions to a product report pack or monitoring dashboard. As well as wider reporting and stakeholder engagement, a report pack or dashboard provides a solid check in against performance for the product owner and analysts allowing them to continually hone and steer priority for their backlog and requests that come in from the wider business.
What’s interesting for me is how many smaller businesses that I start working with don’t have North Stars to follow outside of profit and perhaps cash in bank, whilst those are a good indicator that we’re doing well they don’t touch on the user or customer. It is however inherently difficult to follow North Stars that relate to the delivery of their product or service as a small business as there’s usually very little time to dedicate as an individual or staff to having a specific star to focus on.
On reflection and as I write a conclusion for the piece there may be merit in the adoption of a North Star that’s weighted from multiple metrics, especially within a smaller business. The key here as I’ve learned from working with leaders in insight and data over the years is ensuring that the correct value stream metrics are used, which can only come from interrogation and understanding a business through process mapping.
Photo by Bogomil Mihaylov on Unsplash
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