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Why is it crucial for SaaS products to identify their North Star Metric?

affan ahamed
5 replies
The definitive indicator that your company is satisfying both consumer and executive expectations is North Star Metric. With North Star Metric, you are compelled to focus on the one metric that is most crucial for your long-term growth. It makes it possible for you to monitor your progress and gauge the value you are providing. North star measurements make it easier to comprehend the product's long-term strategy. North Star Metrics Examples Hubspot: Weekly active teams Weekly sessions sponsored by Zoom Focus on a north star metric and begin to expand; I, on the other hand, try a variety of things and concentrate on those that have the most potential. What else would you like to share?

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Max Prilutskiy
Launching soon!
I'd probably highlight these three things. Having a North Star metric is important because it serves as a clear and consistent measure of the *core value that a business delivers to its customers*. This metric provides a clear focus for the business and its teams, ensuring that all efforts are aligned towards maximizing the value delivered to customers. Having a North Star metric also enables businesses to track their progress and make *data-driven decisions*. By regularly monitoring and analyzing the performance of the North Star metric, businesses can identify areas for improvement and make adjustments to better serve their customers. Furthermore, having a North Star metric can *help businesses to prioritize and allocate resources* effectively. By clearly defining the core value that they aim to deliver to customers, businesses can ensure that their efforts and investments are focused on delivering this value.
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affan ahamed
@maxprilutskiy thanks for sharing this valuable insight
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Michael Flux
So while North Star metrics are definitely crucial, one thing I keep seeing over the years is not just startups, but even large companies misidentifying their north stars - be it from pushing some internal pet project at the expense of all else, or by being influenced by some random blog post they saw last week. Let me give you an example - around mid 00s when social networks started getting more popular, a lot of them were boasting about how much time users spend on their site per day. Within a lot of other companies that aren't social networks, people go "look at how great Facebook is doing, and they claim that users spend x hours per day on their site ... we should aim for the same thing". Then as result, some ecommerce company for example, starts trying to optimise their experience for getting the person to spend as much time in the shop as possible ... often coming at the expense of making the experience seamless. Make it too seamless and people add the item to cart and check out within a minute ... which makes it difficult to boast about how people spend an average of 20 minutes on the site filling out quizzes and whatever other silly stuff contributes nothing to revenue. TL;DR, yes North Star, but make sure it's directly relevant to your business, not just something you saw in a blog post.
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Michael Flux
@affan_ahamed Well, profits more specifically. You can have millions in revenue, but if your expenses are in the tens of millions, you're still upside-down 🙃 That is not to say that $ is the ultimate end all for all projects, just that you have to honest with yourself if it's not. Is perfectly fine to say 'our north start is x, and we understand that it will not bring in money, but what it will bring is more important than money'. But just don't be one of those businesses that keeps burning cash for vanity projects while still lying to themselves and pretending like if they only try hard enough it'll all be worth it at the end.
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affan ahamed
@michaelflux thanks for the insights, Do you mean revenue should the mail goal ?
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