Why you need to know about 'North Star Metric'?

One evening, I was scrolling my FB timeline and came across a very interesting term, shared by one of my favorites Shoumik bhaia.
'North Star Metric' or in short NSM! Did some research and got some interesting info about this.

So, what's NSM?

It's a metric that is used by a company as a focus of its growth. Mainly, it defines the relationship between the customer problems that the product team is trying to solve and the revenue that the business aims to generate by doing so. Through this, a company can forecast its short-term vs long-term growth.

These days, we hear the buzzing word 'Growth Hacking' and it aligns with NSM. An insightful quote has been shared by a GH coach,

"Revenue is the price your customer pays. NSM is the value your customer gets in return for the price."

We all want our company to sustain itself for the long run. That's why NSM needs to be considered with great attention. More NSM (more value) brings more revenue. It's simple! When consumers feel valued, they will be willing to pay more than they are asked for.

Let's have a look at some brilliant examples of NSM.

Spotify:
'Time spent listening'. So, they measure their NSM based on the time a consumer spends.

LinkedIn:
At the early stage, it was 'Number of Endorsements'. Unfortunately, because of so many falsified cases, their NSM is now 'MAU'.

Amazon:
The number of purchases per month, a logical NSM for eCommerce.

Quora:
The number of questions answered, fits perfectly with their mission for KS.

And the list can go on. It's so interesting to study NSM and its magic in all industries.

So now the question comes. Should one company have only one NSM?

Well, it's ok to have one for simplified communication. But for big companies, can have between 1-3 for their complex ecosystem to be simplified.

And how to measure NSM?
Can be measured based on 3 different criteria: Attention, Transaction, and Productivity.

More and more details can be written on NSM. I'm also still learning. So, please do let me know if you have any questions.

#metrics #value #northstarmetric