One of the biggest challenges in growth is remaining focused. To stay focused, you must agree and focus on one single metric, your North Star metric. In this video, learn how to create a North Star metric.
- One of the biggest challenges in growth is remaining focused. Growth is exciting. There are often numerous areas you can leverage to achieve progress on your growth goals, but you'll actually diminish your team's effectiveness if you're chasing too many goals and too many ideas. To stay focused, you must agree on one single metric. Every idea, every test and every decision you make will be aligned to this metric. And to be the right metric, it must be measurable and meaningful. In the growth hacking community we refer to this as the North Star Metric.
It's the guiding light. You continue pushing in this direction. For a company like Airbnb, the North Star is likely the number of nights booked. For WhatsApp, it's the number of messages sent. For Facebook, it's daily active users. The North Star Metric is different for every business, and truthfully it can be a hard metric to pick because the best metric needs to have an immediately apparent actionable step. Setting a metric such as make more money is too vague. You can make more money by reducing overhead, increasing prices, adding new business lines and so on.
If you want to make more money, first identify where the best leverage is. If you run an e-commerce store, you might realize increasing the average order value by $5 would have a huge impact on your bottom line. Instead of setting your metric to a broad revenue goal, you can instead focus on average order volume, which will dramatically improve the types of ideas and tests you run. You must pick a North Star Metric that makes sense for your growth. And it's not always tied to revenue. The metric you pick is just the starting point.
It's what you need to accomplish to get to the next step in growth. The North Star you pick now may change over time. Think back to Airbnb. Their first growth goal may have been more nights booked because they know that they can figure out pricing later. They just need a metric that demonstrated the right kind of engagement for their success. They can work to solve this problem across every avenue of their funnel. Perhaps they need more traffic. Or it's a problem discovering properties. Or it's an issue with people worrying about the quality of the home.
As you can see, it's easier to think up experiments when you have this single goal. Perhaps they get to a point where they hit their booking stride, so they turn to increased price per night. Then the focus might be amenities, trading hosts, improving experiences and so on. This is a really important concept in growth hacking, so take time to develop and share your first North Star Metric. Start by collecting ideas for the metric to track from others at your company. Compile the ideas, brainstorm collaboratively and pick the one that resonates with where your business needs to go next.
This course was created by Madecraft. We are pleased to host this content in our library.
- Defining growth hacking
- Building growth teams
- Identifying your customers
- Creating OKRs
- Drafting your lean canvas
- Mapping the customer journey
- Managing the product life cycle
- Generating ideas
- Bouncing back from failure
- Identifying growth opportunities
- Retaining users
- Capturing data