A product north star is a measurement of a product management team’s ability to solve their customer’s core problem, as well as how that relates to the long-term financial goals of the company.
A product north star, or north star metric, is essentially the gold standard by which the product team is judged within an organization. It’s a broad-brush approach, no doubt, but it gives key stakeholders a fast and simple means by which to assess and monitor a product’s success and its alignment to company objectives.
The north star model, sometimes known as the north star framework, is a means of visualizing how a product north star is decided upon. It is effectively a hierarchy of metrics and KPIs with the product north star, quite appropriately, sitting right at the top.
It’s easy to confuse a KPI, which can be quite generic — more downloads, more users, more orders — with a north star, so the framework visualization can bring clarity. Key KPIs are always important, but they should serve a greater purpose — and that’s the north star.
Perhaps the best way to understand how a product north star operates in practice is with a real-world example.
Let’s imagine you’ve built an app that helps users get discounts on their online shopping. In this case, you might have key KPIs which include:
X number of downloads per month
X daily active users
X discount activations per week
These are all valuable metrics, but they don’t encapsulate the true value of the product to a customer.
In this case, a solid product north star would be the Total percentage discount activated per week. Why? Because the discount is what is most valuable to a customer, and the thing which is most likely to have them using the app again and again.
In general, conversations that involve a north star will be centered around products. However, “north star” can refer to a business's overall North star. Here's a breakdown of the two main ways this term is used.
In business, a north star is typically the business's overall mission — the guiding value that drives the company forward. This could be a soft metric, like helping customers succeed, or a more concrete metric, like customer satisfaction.
The benefit of using a north star for your business is that it gives every team and individual something to strive for. It helps keep everyone on the same page, even while working on different projects and tasks.
When it comes to product management, a north star is usually a concrete metric. While you should be measuring other metrics around the development and success of your product, the north star metric is the one that is most crucial to your success. It's the one metric you can point to and say, "Yes, we're moving in the right direction," or, "It's time to rethink our strategy."
The first step when identifying your product's north star metric is to decide which factors are essential to your success. We're not trying to single out one factor just yet.
Instead, you should create a list of all the factors that will help you determine whether or not this product is meeting your company's goals.
Next, you'll want to list the KPIs that will help you measure these factors. There can overlap, so you may have more or fewer KPIs than you have factors. That's totally fine.
Once you have a list of KPIs, you'll want to start ranking these KPIs based on importance. The least important KPIs, or the ones least indicative of your product's success, go near the bottom of your list.
As you go through the process of ranking your KPIs, there should be at least one, and maybe even a few, KPIs that are standing out. These are the ones that best represent that your product has been successful.
Continue to discuss and evaluate these KPIs with your team until you settle on one KPI that ranks above all of the others. This is your product's north star. It's a KPI that can be used to measure the most important factor for this product's success.
Different products have and will have different north start metrics. Here are a few north star metric examples from products you’ll recognize.
Netflix's north star is watch time. The longer people are watching, the more successful the company is.
Slack's north star is active daily users. The more daily active users there are, the closer Slack is to reaching its goals.
Amazon's north star is the number of purchases made per month.