North Star

A North Star Metric (NSM) is the single measure that best predicts a product’s or company’s long-term success because it captures the core value delivered to users. Choosing it is a strategic exercise that requires full executive alignment and several cross-functional meetings.

There are four broad families of NSMs. First are user-engagement or product-action metrics (for example, Airbnb’s weekly nights booked or Slack’s daily messages) that rise when both reach and engagement grow. Second come user or object counts—daily active users, paid seats, dollars under management—suited to businesses whose near-term growth lever is expanding the audience rather than deepening usage. Third is a hybrid: user counts that include an activity threshold such as “users with ≥ 4 file shares per month,” ideal when you already have a sizeable base but need those users to engage more deeply. Finally, transaction-driven businesses (e-commerce, peer-to-peer payments) often adopt Gross Merchandise Value (GMV), which naturally blends the number of transactions with their average size.

The metric you pick must align with your current growth priority. Companies built on usage typically choose one of the first three types, selecting reach, engagement, or both as the focus. Firms whose economics hinge on purchase volume and basket size gravitate to GMV.

Once a candidate metric is identified, test it against six qualities: it should mirror the core user benefit, move in response to improvements anywhere in the funnel, be easy for everyone to understand, react quickly to experiments, be simple to measure accurately, and correlate with revenue or another key business outcome without being revenue itself (since revenue lags and is distorted by pricing). GMV is the notable exception because, for transaction platforms, it’s both leading and value-centric.

An NSM does not live in isolation. A short list of guardrail metrics—for instance customer count or average order value—should be tracked to ensure that driving the North Star doesn’t damage other aspects of product health.

Selecting and operationalising an NSM is therefore a five-step process: workshop the product mission and growth model with leadership; choose the NSM type that matches the immediate growth lever; refine the precise definition until it meets most of the six qualities; define and instrument guardrails; and finally bake the NSM into team OKRs and experiment dashboards so every initiative can be judged by its impact on that single, shared measure.

The bottom line: a well-chosen North Star Metric focuses the whole company on creating compounding user value, flags problems earlier than revenue can, and offers a common language for making product and growth decisions.