As part of the Bahrain Ecommerce Academy Training, we teach businesses techniques to become part of the digital economy. One of the concepts that many companies find useful to align teams, especially in larger organisations, is the North Star Metric.
What is a North Star Metric?
This measure, or KPI is the single thing that, if focused on will drive all other metrics or results in a business. For many companies, Sales or Profit is the goal, but there may be something else, that is more fundamental, that drives sales or profit.
The North Star Metric has been popularised by Silicon Valley companies like AirBnB and Facebook to give everybody in the company a goal. Something to benchmark against, something to optimise.
Let’s imagine that you are a video streaming company. Traditional measures might include subscriptions, or sales or number of viewers, or churn. A North Star Metric might be “Minutes of Video Watched’. If everybody is thinking about how to increase this number, then all the other metrics will look after themselves.
What is YOUR North Star Metric?
The North Star Metric is closely linked to your value proposition. What is the value that the customer is getting from your product and service?
There are some famous examples of company failures, that with 20/20 hindsight, could have been avoided by looking at a measure of value to customers. I only need to say the word Kodak and you get a sense of what I am talking about.
Kodak sold film. But the value proposition was different. Kodak helped people remember moments and share stories. Looking at your product features rather than benefits leaves you open to being blindsided by a disruptive digital company that understands its customers and its true value proposition.
So think about your customers. Think about your Value Proposition. How do you measure whether or not you are delivering against the unique promises that you are making your customers.