North Star Metric

The North Star Metric (NSM) is a key performance indicator (KPI) used by startups and growth-stage companies to measure the long-term success and health of their business.

North Star Metric (NSM) is a single metric that is considered the most important indicator of the company’s growth and overall success. It reflects the core value delivered to customers and is often used to align teams across an organization toward a shared goal. The idea is that by focusing on this one key metric, all efforts within the company—whether in sales, marketing, product development, or customer service—will contribute directly to growth.

The North Star Metric differs from other KPIs because it encapsulates both customer value and company growth. For example, in SaaS (Software as a Service) businesses, a potential North Star Metric could be "Daily Active Users" or "Monthly Recurring Revenue" (MRR), as these metrics directly relate to how well the business is engaging customers and maintaining its user base.

The North Star Metric is meant to drive the company toward long-term value, focusing not just on short-term revenue or profitability but on sustainable growth by keeping customers at the center of business operations. It provides clarity in decision-making and ensures that every department works toward improving that metric, fostering cross-functional alignment.