Defining Your North Star Metric

An adaptable framework that helps align business goals and users needs into your product strategy.

Bridging Business Goals and User Needs

Product managers often sit at the intersection of business goals and user needs. While we talk a lot about being user-centric, the reality is that business priorities such as driving acquisition, revenue, engagement, or retention, tend to shape product direction more than a user simply wanting a button moved.

Where things get difficult is in the strategy. Many PMs can execute on features but aren’t always clear why one initiative is prioritized over another, especially if they don’t own the roadmap or if leadership hasn’t clearly communicated the business goals. Without that clarity, alignment and product success become harder to achieve.

Coming from a marketing background, I was used to starting with business needs. User insights mattered, but understanding the broader “why” behind an initiative such as promoting a new product or service, gave everything direction.

As I moved into tech and product, I learned that business and user needs aren’t competing forces. They work best when they’re brought together. The challenge is knowing how to balance them, and I wanted to share a framework that has helped me do exactly that.

The Northstar Framework

To begin, it’s important to be able to answer: how does an organization make money? What is their business strategy, vision and goals as a company? What are some of the keywords used by leadership that you need to adopt?

The North Star metric can be defined many ways though I find this one quite common, “The single metric that best captures the core value that your product delivers to customers and is the key to driving sustainable growth across your full customer base.”

Ideally your North Star metric should be easy to understand. Where everyone on the team: can contribute to inspiring and guiding day-to-day action, measure if customers are experiencing the core value, and identify the leading indicator or business impact that connects to the business vision. The North Star metrics doesn’t have to be long, though it should be impactful.

So how do you make your framework actionable, ensure that it actually helps you determine your North Star metric and maps back to your business vision and customer needs?

Step 1: Know Your Business Goal and Vision

Your organization's business goal and vision are lagging indicators that are based on business-centric growth. They should lead to generating long term value. As an example, a business may need to reduce costs (bottom line) or increase revenue (top line).

The business goal and vision are usually defined by an organization's leadership team and should be consistently found in quarterly reports, roadmap documents and other presentations that highlight the strategic aims the business is trying to achieve. If the business goal and vision are not easy to find, you may need to seek it out. Talk to your manager, look at internal websites, speak with colleagues.

Step 2: Building Your Framework

Define your North Star metric:

Discuss in a group or product trio setting, what is the core value of the product in relation to the business goal.

Use the below questions to guide your North Star metric: Does it align with customer value? Does it inspire action? Can you measure it? Can everyone understand it? Can everyone contribute? Is it directly tied to growth? Will the metric value change frequently? Does it apply to all active users?

Some examples of North Star Metrics from popular companies:

Spotify: Time spent by subscribers listening to music pr. Month
Airbnb: Booked nights per user yearly
Slack: Messages sent within the organization every week

Define your initiatives:

This is where you can start to solution ideas. Leverage what you’re hearing from users, what’s working, what’s not working, what’s upcoming in the industry (i.e. AI) and brainstorm some products and or features that could map back to both the business goal and help resolve users needs.

Define your success metrics:

Based on your initiatives, identity the input metrics of your chosen North Star Metric from each of the four dimensions:

Breadth: Who’s engaging?
Depth: How much are they engaging?
Frequency: How often are they engaging?
Efficiency: How effectively are they achieving outcomes?

Step 3: Sell Your Idea

You now understand what the business wants to achieve, you’ve created your North Star Metric and you’ve mapped how to plan to achieve it. Now it’s time to sell your idea to stakeholders. While you may have a bunch of ideas and initiatives, you may want to start with presenting just one. Get the initial buy-in to your thinking and validate your framework. Then sell in the next idea. This will help ensure you don’t overwhelm stakeholders and is a good usage of time - especially if you’re pitching C-suite stakeholders.

Use the below template to help frame your thinking and sell in your idea:

We want to build (Insert Initiative Idea) to increase our (Insert Input Metric) this supports our overall product strategy, because it works towards (Insert North Star Metric), that will long term lead to (Insert Business Impact) supporting (Insert Business Vision/mission statement).

Pulling It All Together

Below is an example of using this NorthStar framework for Spotify that focuses on “why” you are doing something and “how” you plan to achieve it.

Sell Statement

We want to build (a free trial experience) to increase our (number of users converting to paid subscriptions) this supports our overall product strategy, because it works towards (the amount of time spent by subscribers listening to music per month), that will long term lead to (increased revenue) supporting (our mission to become the world's creator platform).

Conclusion

Using a North Star framework guides direction and day-to-day actions amongst teams, while maintaining a focus on long term success. It may not solve all your user problems though it can help obtain business objectives, giving you more runway to focus on some of the user problems you want to work on. Hope this framework helps and if you have any comments or additional insights, please reach out to me and share your feedback.

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