How to define your North Star Metric as a start-up or small business

A clear direction is essential for any small business or start-up looking to navigate growth. But how do you know if you're heading in the right direction?

Enter the North Star Metric, a single, robust measurement that encapsulates the value your business delivers to its customers.

In this blog, we'll explain what a North Star Metric is and why it's important, share examples from well-known brands and show you how to create your own.

Plus, we’ll hear from Enterprise Nation members on how they track their North Star Metric to steer their business towards growth.

What is a North Star Metric?

A North Star Metric (NSM) is the key metric that captures the core value your product or service delivers to your customers.

It’s the guiding light for your business — the single number you focus on to drive sustainable growth.

For start-ups and small businesses, your NSM reflects how well you’re serving your customers and growing your business at the same time.

Why is a North Star Metric important?

Having an NSM gives your entire business a clear, unified focus. It helps align teams, prioritise actions and measure long-term success.

While most companies track many performance indicators (sales, profit, customer retention), the NSM forces you to zero in on the value that will ultimately drive sustainable growth.

It’s your 'north star' that shows whether your business is moving forward or drifting off course.

Examples of North Star Metrics from well-known brands

Different businesses use different NSMs depending on their unique value proposition. Here are examples from three successful companies:

1. Airbnb

Airbnb's NSM is nights booked. This metric directly tracks how well Airbnb is connecting guests with hosts and fulfilling its core mission of offering unique stays.

2. Spotify

Spotify’s NSM is time spent listening. This metric tracks how much value users get from their service – more listening time equals more engagement and satisfaction.

Spotify's thought process behind its NSM

3. Slack

The NSMs from Slack are the number of messages sent or daily active users (DAU), but no definitive answer is available online.

DAUs seem more appropriate for a messaging app than MAUs because the goal isn't necessarily for people to send as many messages as possible but rather for them to send them as efficiently. This may result in fewer messages being sent.

Each of these metrics reflects the value the company brings to its users. The key to choosing yours is to find the measurement that represents your business’s value to its customers.

How to write your own North Star Metric

Creating an NSM takes careful thought. Here’s a step-by-step process to help you formulate your own:

1. Identify your core value: What is the single most important thing your product or service offers? Think about what makes your customers happy or satisfied.

2. Understand what drives growth: Your NSM should be closely tied to the factors that drive your growth, whether that’s user acquisition, product usage or recurring revenue.

3. Keep it simple: Your NSM should be a straightforward metric everyone in your business can understand and rally behind. Avoid complicated or confusing metrics that don’t tell a clear story.

4. Make it measurable: Your North Star Metric needs to be something you can track regularly. It should be quantitative and easily comparable over time.

5. Check its alignment: Make sure the NSM you choose aligns with your overall business goals and objectives. It should encourage you to deliver value in a scalable and sustainable way.

Top tip: One template worth leveraging is the MIRO template. If you're starting from scratch, involve your team and run a workshop with this template as the backdrop.

Example of Miro template to shape your NSM

Simple and quick ways to track your North Star Metric

Tracking your NSM doesn't have to be time-consuming or complicated. Here are some simple and quick ways to stay on top of it:

• Dashboards: Set up a dashboard that updates your NSM automatically using tools like Google Analytics, Excel or dedicated business intelligence platforms like Tableau or Power BI.

   

  Try the free trial of Power BI to set up basic dashboards to track your NSM

   

• Weekly reports: Include your NSM in your weekly reports. Monitoring it regularly helps ensure your business stays on course.

• Team check-ins: Discuss your NSM in team meetings. This ensures everyone stays focused on the key metric that drives growth.

• Customer feedback: Sometimes, qualitative data may influence your NSM. Regularly gather customer feedback to ensure your metric still aligns with the value your customers are getting.

Enterprise Nation members share their North Star Metrics

We asked three Enterprise Nation members what their NSM is and how it helps them steer their business:

1. Tammy Whalen Blake, The Yellow Mastermind

Tammy is an Enterprise Nation member and founder of The Yellow Mastermind. Tammy's NSM is the clients' success metrics achieved.

The Yellow Mastermind focuses on helping clients meet their personal and business growth goals. Through their flagship service, the company helps micro-businesses work to reduce their working hours while growing their revenue.

The programme begins by setting clear, measurable goals in the first six weeks and tracking progress over 12 months, ensuring that clients’ success directly reflects Tammy and her team's success.

2. Jonny Cottom, Breakbottle

Jonny and his team at Breakbottle have faced challenges around brand recognition and customer acquisition. Still, they’ve made significant strides by securing a large corporate deal that funded new production and a rebrand.

Moving forward, Breakbottle’s NSM will focus on increasing the lifetime value to customer acquisition cost (LTV:CAC) ratio.

It aims to improve its direct-to-consumer (DTC) and business-to-business (B2B) elements by increasing average order value and retargeting existing customers to enhance customer lifetime value. At the same time, it aims to reduce acquisition costs through improved brand recognition.

3. Victoria Davies, Founder + Lightning

Victoria is lead product manager at Founder + Lightning, with six years of experience building and launching products for pre-seed founders. She believes that defining an NSM in the early stages of a business can be challenging.

She's seen common mistakes, such as:

• sticking to a metric that no longer aligns with the evolving business

• focusing solely on revenue (which doesn't provide timely insights for course correction), and

• choosing feel-good metrics that don’t reflect real user value

Victoria recommends that early-stage businesses select an NSM for just three months, ensuring it captures how users find value. If it doesn’t drive growth, pivot and try a new metric.

Conclusion

Defining your NSM is crucial to making sure your small business or start-up has a clear, focused direction for growth.

It helps you track the value you deliver to customers and ensures your team works toward a common goal. By following the steps outlined here, you can create your own NSM and start tracking it immediately.

Relevant resources

• Seven ways to position your product successfully on a bootstrap budget

• Lunch and Learn: How to get the most from customer feedback