Every product manager feels the pressure of balancing customer value with business outcomes. Yet, teams often end up chasing too many KPIs, drowning in dashboards, or getting lost in vanity metrics.
This article aims to demystify the use of North Star Metric (NSM), a simple but powerful concept that helps teams focus on what really matters. You’ll walk away with:
- A clear understanding of why an NSM can change your game
- The five traits that make an NSM strong.
- A practical playbook for selecting the right NSM for your product.
- Guardrails to keep your metric from going off track.
Why a North Star Metric?
Traditional metrics often measure lagging indicators (revenue, retention, or market share).
While these are critical for assessing the current state of your product, they fall short in a few ways:
- They don’t capture the capability of your product to actually solve a problem or satisfy a need for your customers.
- They don’t tell you what to prioritise next in order to maximise impact on those needs.
- They don’t provide a unifying direction for the whole company, which means different teams may optimise for different outcomes and drift apart.
This is the gap that Sean Ellis and Morgan Brown, who introduced the concept of the North Star Metric (NSM) in Hacking Growth, set out to address. In their work with high-growth companies, they saw that when teams lacked a shared guiding metric, they would get lost in siloed KPIs. The NSM was their answer: a single measure that keeps everyone aligned around delivering customer value in a way that fuels long-term growth.
What is a North Star Metric?
“The North Star should be the metric that most accurately captures the core value you create for your customers.” — S. Ellis, M. Brown, Hacking Growth
The North-Star Metric is the single most important measure that reflects the core value your product delivers to customers.
Sean Ellis and Morgan Brown describe it as the guiding light that keeps product teams focused on long-term value creation rather than chasing short-term wins. The expression “north-star” emphasises its capability bring alignment on the direction within the company, not just on numbers.
Indeed, it plays a key role strategy alignment. It connects the dots between:
- Customer value
The NSM must tie directly to the “aha moment”, i.e. the instant when a customer experiences the product’s must-have value for the first time. This is the moment of truth where users realise, “I can’t live without this.” Measuring how often and how deeply customers reach that point ensures the team stays focused on improving real user outcomes, not vanity metrics like clicks or installs.
- Product strategy
The NSM translates the company’s strategy into execution-level priorities. It provides a northward reference point for what to build next, how to design experiments, and how to allocate resources. When the metric improves, everyone knows it’s because the product is delivering more value.
- Business outcomes
A great NSM is a leading indicator of long-term growth and revenue. It links everyday product activity to the health of the business: more customers achieving value leads to stronger retention, higher lifetime value, and organic word-of-mouth growth.
By placing the NSM at the center, companies avoid what the Ellis and Brown refer to as “haphazard, scattershot approaches to growth” and instead build a virtuous cycle: deliver more value to customers, who in return are more willing to return and pay more, ultimately causing first the NSM and then the business to grow.
It’s important to note that a NSM doesn’t replace other metrics: companies should still track a full suite of KPIs for operations and health. But the NSM sits above them as the rallying point for prioritisation, focus, and decision-making. When in doubt about which feature to build, which experiment to run, or which bet to double down on, the NSM provides the reference point.
Here below are some examples of NSMs from notable companies:
- Airbnb → nights booked
- Spotify → time spent listening
- Slack → messages sent per team
- WhatsApp → messages sent
- eBay → gross merchandise volume (GMV)
Each of these metrics reflects *customer value creation first (*travel experiences, music enjoyment, team communication, …) while also serving as a strong predictor of long-term revenue growth.
The five characteristics of a strong NSM
A valuable NSM should
- Capture the value customers get from the product
- Lead revenues and be strongly built around the business model of the company
- Be influenceable in a short period of time (around a month)
- Have 10× headroom, scaling with the business and not being capped too quickly.
- Bring clarity and be easy to explain to new hires, investors, or customers in one sentence.
If your candidate metric for NSM fails one of these requirements, you should keep iterating. The table below summarises an analysis of how the NSMs picked by Whatsapp and eBay meet all the 5 characteristics mentioned above.
Selecting the right NSM for your product
Picking a NSM for your product is a 3-step (iterative) process:
- Identifying your product value-creation category
- Mapping your value-chain
- Test if it can be artificially inflated
1. Value-creation category
Different product types need different NSMs but, overall, the value-creation mechanism of a product falls into one of the following categories:
- attention,
- transaction
- productivity.
Placing your product in one of these categories helps you narrow down. the field of candidate NSMs and keeps you focused on metrics that truly capture your product’s core value to customers.
Attention
Products in this category create value by capturing and sustaining user attention. The more time and engagement a user invests, the more value they receive. Growth here depends on deepening engagement and building habits that bring users back repeatedly. A strong Attention-based NSM reflects depth of engagement, ensuring that growth comes from genuine interest rather than empty clicks or idle scrolling.
🏭 Typical industries: media, social networks, streaming, gaming, entertainment platforms
💡 NSM examples: focus on time spent, engagement depth, or content creation.
Transaction
Transactional products create value by enabling exchanges between two or more parties: buyers and sellers, hosts and guests, drivers and riders. The product’s success lies in how efficiently and frequently these exchanges occur and how much value they generate for both sides. A Transaction-based NSM captures the moment of mutual success, when the platform delivers on its promise by connecting supply and demand in a way that drives repeat usage and trust.
🏭 Typical industries: e-commerce, marketplaces
💡 NSM examples: completed purchases, completed bookings, or successful user matches.
Productivity
Products in this category create value by helping customers work more efficiently, collaborate better, or achieve outcomes faster and with less effort. Their growth depends on the depth of adoption—how embedded the product becomes in users’ daily workflows. A Productivity-based NSM should measure the frequency and quality of successful outcomes, proof that the product is making users more capable and driving sustained engagement within teams or organizations.
🏭 Typical industries: B2B SaaS, AI agents
💡 NSM examples: workflows completed, tasks automated, or collaboration achieved.
2. Map the value chain
Once you know your value-creation category, the next step is to map out the journey from first touch to revenue. Think of it as laying out a simple value chain:
- Acquisition: How customers first discover or sign up.
- Activation: The first core action they take that signals engagement.
- Value Delivery: Where they experience the “aha moment” that proves your product solves their problem.
- Revenue: How that recurring value eventually translates into payment, retention, or referrals.
The NSM should sit at the inflection point, the place in the chain where customer success and business success overlap. For example:
- At Airbnb, this wasn’t “new listings created” (supply) or “new users acquired” (demand). It was nights booked, the moment that guests and hosts both succeeded.
- At Slack, it wasn’t “signups” or “downloads.” It was messages sent per team, which correlated tightly with long-term retention and willingness to pay.
A strong NSM connects these dots: the more customers succeed, the more the business grows.
3. Test for artificial inflation
The final step is a sanity check: could teams artificially inflate the metric without delivering more customer value? If the answer is yes, it’s not a good NSM. For instance, daily active users (DAU) might be gamed by sending constant push notifications. Downloads could spike from an expensive ad campaign, without anyone actually using the product.On the contrary, nights booked, tasks completed, or workflows automated are harder to inflate without genuine customer benefit. To increase them sustainably, the product itself must deliver more value.
This test protects you from vanity metrics and ensures your NSM remains a true proxy for long-term growth.
Common pitfalls and guardrail
Even well-chosen NSMs can go wrong if teams treat them as a finish line rather than a compass. Without care, the metric risks being gamed, misunderstood, or losing relevance as the business evolves.
Some most common pitfalls are:
- Gaming the metric: teams hit the number without creating real value. For example, sending spammy notifications to boost “sessions” or discounting heavily to pump up “orders” may move the NSM temporarily but erode trust in the long run.
- Vanity spikes: promotions, stunts, or PR bursts can create short-lived lifts that look like progress but don’t reflect sustainable growth. An NSM is about compounding value, not one-off fireworks.
- Missing or messy data: if your instrumentation is weak, you’ll struggle to measure your NSM accurately. For example, a flawed data pipeline can undermine confidence in the metric and mislead decisions.
To protect the integrity of your NSM, it’s crucial to establish a few guardrails from day one:
- Pair your NSM with counter metrics: balance your North Star metric with a small set of companion measures that flag unhealthy growth. For example, if your NSM is “time spent,” track churn and NPS alongside it to ensure users are staying because they love the product, not because they’re stuck.
- Instrument early and validate: don’t wait until your NSM is on the CEO’s dashboard to check if the numbers are accurate. Validate your tracking, schemas, and event definitions with your team before using the NSM to guide strategy.
- Revisit regularly: as your product, market, and strategy evolve, so should your NSM. A good cadence is an annual review: is the metric still the clearest expression of customer value? Does it still lead revenue? If not, recalibrate or change it.
Strong guardrails ensure your NSM doesn’t just look good in a board deck but actually delivers on its promise: a reliable, leading indicator of sustainable customer and business value.
A red flag checklist
Ask yourself these questions periodically. A “yes” to any of them signals your NSM needs attention:
- Can teams influence the NSM by doing something that doesn’t improve customer value?
- Have you seen sharp spikes followed by immediate drops in the NSM?
- Do different stakeholders distrust or debate the accuracy of the data?
- Are teams optimising for the NSM at the expense of customer experience (e.g., more ads, more clicks, but less satisfaction)?
- Has your product strategy shifted significantly while the NSM has stayed the same?
If one or more red flags show up, it’s time to pause and re-examine. The strongest NSMs are living tools that evolve with your product and strategy.
Conclusion
The North Star Metric is a useful tool that helps tie your strategy to your execution, ensuring your team builds what matters most. It’s the compass that keeps your product team aligned around delivering real customer value in a way that drives sustainable growth. Its purpose is simple but powerful: to cut through the noise of dozens of metrics and focus the organisation on the single measure that best captures your product’s value to customers.
Define your NSM, test it through the red flag checklist and build strong guardrails to prevent loss of confidence or irrelevance. Get this right, and your NSM will be the unifying thread that links your day-to-day execution with long-term company strategy. It will help your teams prioritise, prevent distractions, and keep the entire organisation rowing in the same direction toward growth that lasts.
