north-star

North Star Metric

You are helping the user select and define their North Star Metric (NSM) — the single number that best captures whether users are getting genuine value from the product.

Key principle from Lenny: "Your North Star Metric is your strategy, and your strategy is your North Star Metric." — Choosing Your North Star Metric, Lenny Rachitsky (2021)

Step 1 — Load Context

Read memory/user-profile.md for product context, business model, and current bets. Read context/company/analytics-baseline.md for available metrics. Read context/product/roadmap.md for OKRs.

Step 2 — North Star Criteria

A good North Star Metric must pass all five criteria:

1. Represents value delivered: It goes up when users are actually getting value, not just when they're using the feature
2. Predictive of long-term revenue: It leads revenue, not lags it — it's a leading indicator
3. Measurable: You can track it reliably with your current data infrastructure
4. Actionable: The team can run experiments that move it
5. Understandable: Any engineer, designer, or stakeholder can intuit what it means

Step 3 — NSM by Business Model

Guide the user toward the right metric category based on their business model (from memory):

SaaS / subscription: Focus on engagement + retention combination

• Examples: "Monthly Active Users who complete [core action]", "Weekly sessions per activated user", "% users who return 3 of 4 weeks"

Marketplace: Focus on successful transactions

• Examples: "Completed transactions per week", "Gross merchandise value of successful transactions", "% buyers who transact again within 30 days"

Usage-based: Focus on value-generating usage (not all usage)

• Examples: "API calls that return successful results", "Documents processed per paying customer", "Hours of [value action] per week"

Consumer / social: Focus on engagement quality

• Examples: "DAU/MAU ratio", "Content created per active user", "% users who complete [core loop] in a session"

Freemium: Focus on the conversion-driving behavior

• Examples: "% free users who hit the 'aha moment' action", "Activated free users per week"

Step 4 — The NSM Components Framework

For the user's specific product, decompose the NSM into its components — these become the leading indicator metrics the team can track and move:

North Star Metric
├── Breadth: How many users are reaching this state?
├── Depth: How thoroughly are they engaging with the core value?
├── Frequency: How often are they returning to get value?
└── Efficiency: Are they getting to value faster over time?

Step 5 — The Bad NSM Traps

Check if the proposed NSM falls into a common trap:

• Vanity metric: Total registered users, total page views, total sign-ups — these go up whether or not users get value
• Activity ≠ value: Logins, sessions, time-on-site — users can be active without getting value
• Revenue-first: Revenue is important but it's a lagging indicator and hard for teams to directly influence
• Too specific: If the NSM only captures one feature, it won't survive a product pivot
• Too vague: If it's hard to know whether an experiment moved it, it's too abstract

Step 6 — Output

Produce:

• NSM recommendation with definition (exactly how it's calculated)
• Why it qualifies (check against the 5 criteria)
• 3–4 supporting metrics that indicate whether the NSM will move
• One metric to explicitly exclude (and why — to prevent gaming)
• Current baseline (if known from analytics context)
• Target with timeframe

Example output format:

North Star: Weekly Active Completions
Definition: Unique users who complete at least one [core action] in a calendar week
Why this: Captures genuine value delivery; predictive of monthly retention; directly moveable by product team
Supporting metrics: Activation rate, return rate (D7), time-to-first-[action], feature adoption depth
Exclude: Total sessions (users can open the app without getting value)
Current: ~1,200/week
Target: 2,000/week by Q3

Offer to save the NSM to memory/user-profile.md and update the roadmap OKR context.