Home / Phase-2 / Defining North Star Metrics
Phase 2
Defining North Star Metrics
Phase progress0 / 0 completed
Every product needs a compass. For product-led companies, that compass is the North Star Metric (NSM) — the single measure that best reflects the enduring value customers get from your product. A good NSM aligns teams, predicts revenue growth, and ensures effort is directed toward meaningful outcomes. But not all metrics qualify. This section breaks down what makes a good vs. bad North Star, common pitfalls, and how to define one that truly guides your product strategy.
What Is a North Star Metric?
A North Star Metric is not just another KPI. It is value-centered, influenceable by the team, and a leading indicator of long-term revenue and growth. It captures the core benefit users derive from your product.
Example: For Dropbox, a stronger NSM was “trial accounts with >3 active users in week 1” rather than just “trial signups.” The first reflects genuine value and signals conversion potential.
Good vs. Bad North Star Metrics
What Makes a Good NSM?
- Focuses on customer value
- Reflects company vision & strategy
- Is actionable & measurable
What Makes a Bad NSM?
- Vanity metrics (e.g., page views)
- Lagging indicators (e.g., ARR/MRR)
- Over-focus on revenue
- Isolated measures teams can't influence
The North Star Framework: Metric + Inputs
The NSM doesn’t exist in isolation. It lives within a framework of inputs — the levers teams can directly pull.
Example: Grocery Delivery App
North Star Metric
Monthly items received on time
Drive repeat orders
Increase items per order
Fulfill orders reliably
Reduce late deliveries
Resources
ProductLed
How to identify the North Star Metric for your product-led business (& why it matters)
Open ResourceDone with this module?