--- name: define-north-star description: Identify and validate your North Star Metric. Aligns product strategy with key business metric. disable-model-invocation: false user-invocable: true --- # Define North Star Metric **When to use:** During strategy planning, when metrics feel scattered, or when teams are optimizing different things **Framework source:** Aakash Gupta's "Do you really need a North Star Metric?" ## Quick Start 1. Tell me: "Help me define our North Star metric" (or "Validate our current North Star") 2. I will check [[business-info-template]] and `thoughts/shared/pm/frameworks/` for your business model, growth stage, and existing metrics 3. I will ask about your core value, retention drivers, and business model to narrow candidates 4. We work through: Core Value identification, Metric formula (Frequency x Core Action x Breadth), Validation tests, Input metrics, and Guardrails 5. Output goes to `thoughts/shared/pm/metrics/north-star-[quarter].md` **Key decision:** Not every product needs a single North Star. Marketplaces, multi-product companies, and complex B2B may need a constellation of 2-4 metrics instead. I will help you decide which approach fits. ## Context Routing Logic (Internal - for Claude) **Automatic Context Checks:** When this skill is invoked, immediately check: | Source | Files/Folders | Search Terms | What to Extract | | --------------- | ---------------------------------------------- | ---------------------------------------- | ------------------------------------- | | Strategy Docs | `thoughts/shared/pm/frameworks/*.md` | objective, business goal, success metric | Current metric direction, if any | | Business Model | `thoughts/shared/pm/context/business-info-template.md` | revenue model, growth focus, metrics | What drives the business | | Metrics History | `thoughts/shared/pm/metrics/*.md` | baseline, trends, retention data | Current metric baselines and movement | | Meetings | `thoughts/shared/product/meeting-notes/*.md` | "North Star", "KPI", "success metric" | Stakeholder expectations | | PRDs | `thoughts/shared/pm/prds/*.md` | success metric, target | Feature-level success indicators | **Context Priority:** 1. Business model and revenue drivers FIRST 2. Current product stage and growth focus SECOND 3. Historical metrics data THIRD 4. Stakeholder expectations FOURTH **Cross-Skill Links:** - If building strategy → Link to `/write-prod-strategy` which uses North Star - If defining feature metrics → Link to `/feature-metrics` which should ladder to North Star - If analyzing retention → Link to `/retention-analysis` to identify leading indicators - If setting up metrics framework → Link to `/metrics-framework` --- ## Step 0: Understanding Your Current Metric State Before defining your North Star, let me understand where you are... **Checking:** - `thoughts/shared/pm/context/business-info-template.md` for your business model - `thoughts/shared/pm/frameworks/` for strategic direction - `thoughts/shared/pm/metrics/` for baseline metrics and trends - `thoughts/shared/product/meeting-notes/` for stakeholder priorities **Based on what I find, I'll show you:** ### Current Metric State **Business Model:** - [How do you make money? Subscription / marketplace / ads / transactions?] - [Growth stage: acquisition focus / retention focus / monetization focus?] - [TAM: addressable market size] **Existing Metrics:** - [Current metrics dashboard: what are you tracking?] - [Metric trends: what's moving, what's flat?] - [Stakeholder focus: what does leadership care about?] **Metric Gaps:** - [Metrics that aren't connecting to decisions: vanity metrics?] - [Decisions being made without data: where are you flying blind?] ### PM-Specific Diagnosis Questions 1. **Business Model Clarity:** Are you clear on what drives revenue/value in your business? 2. **Growth Focus:** Are you optimizing for growth, engagement, retention, or monetization? 3. **Team Alignment:** Do all teams agree on what success looks like? 4. **Data Quality:** Do you trust your existing metrics data? 5. **Decision Speed:** How quickly do you need to make decisions? (Hourly, daily, weekly, monthly?) --- ## What is a North Star Metric? **Definition:** The single metric that best captures the core value your product delivers to customers. --- ## Do You Actually Need One? ### When a North Star Metric Works Well: ✅ **Product-led growth (PLG) companies** - Self-serve product - Clear activation moment - Example: Slack's "Teams sending 2,000+ messages" ✅ **Consumer products with network effects** - Value increases with usage - Example: Facebook's "Daily Active Users" ✅ **Early-stage companies (Seed to Series B)** - Need focus and alignment - Limited resources require prioritization --- ### When a North Star Can Be Misleading: ❌ **Marketplace/multi-sided platforms** - Optimizing for buyers might hurt sellers - Need balanced metrics for both sides - Example: Airbnb tracks host AND guest metrics ❌ **Complex B2B enterprise products** - Multiple stakeholders with different needs - Example: Salesforce has different success metrics by user role ❌ **Companies with multiple business models** - Each line of business may need different metrics - Example: Amazon (retail vs AWS vs ads) --- ## The North Star Framework A good North Star Metric has three components: ### 1. Core Action What is the one thing users do that indicates they're getting value? **Examples:** - Spotify: Time spent listening - Airbnb: Nights booked - Slack: Messages sent - LinkedIn: Weekly active users - Notion: Documents created --- ### 2. Frequency How often should this action happen to indicate real value? **Examples:** - Daily: Social apps (Instagram, TikTok) - Weekly: Productivity tools (Notion, design tool) - Monthly: Marketplace (Airbnb, Uber) - Per-session: E-commerce (Amazon) --- ### 3. Breadth Who needs to do this action for it to count? **Examples:** - Individual users: Netflix (hours watched per user) - Teams: Slack (active teams sending messages) - Multi-sided: Uber (completed trips) --- ## Formula: [Frequency] × [Core Action] × [Breadth] **Examples:** **Slack:** - Frequency: Daily - Core Action: Messages sent - Breadth: Active teams - **North Star:** Daily Active Teams sending 2,000+ messages **Airbnb:** - Frequency: Per transaction - Core Action: Nights booked - Breadth: Guests - **North Star:** Nights booked **Spotify:** - Frequency: Weekly - Core Action: Time listening - Breadth: Active users - **North Star:** Weekly Active Users × Hours listened --- ## How to Find Your North Star ### Step 1: Identify Your Core Value Answer these questions: 1. **What problem does your product solve?** - Not features, but the actual problem 2. **When do users say "aha, this is valuable"?** - Look at retention data: what do retained users do differently? 3. **What action most correlates with retention?** - Run cohort analysis - Compare churned vs retained users Use this prompt: ``` Use /define-north-star and reference [[business-info-template]] Help me identify our core value: - Product: [describe your product] - Customer problem: [what problem you solve] - Retention data: [describe retained vs churned user behavior] What action best captures when users get value? ``` --- ### Step 2: Validate Against Criteria Your North Star should be: ✅ **Measurable** - Can you track it accurately? - Do you have the data infrastructure? ✅ **Actionable** - Can teams influence it with their work? - Are there levers to pull? ✅ **Leading indicator** - Does it predict revenue/retention? - Or is it just a vanity metric? ✅ **Understandable** - Can everyone in the company explain it? - Does it pass the "grandma test"? ✅ **Captures sustainable value** - Not gameable - Reflects real customer value --- ### Step 3: Test for Tradeoffs **The real test:** Does it help you make hard decisions? **Example decision scenarios:** **Scenario 1:** You can either: - A) Improve conversion rate +10% (more signups) - B) Improve Day 7 retention +5% (better activation) Which moves your North Star more? **Scenario 2:** Marketing wants to: - Run a campaign that brings 10K new users (low quality) - Or 1K highly-targeted users (high quality) Which aligns with your North Star? **If your North Star doesn't help you choose, it's not working.** --- ## Common North Star Metrics by Category ### Social / Community Products - **Facebook:** Daily Active Users (DAU) - **Instagram:** Daily Active Users sharing stories - **TikTok:** Time spent watching videos - **Discord:** Weekly Active Servers ### Productivity / Collaboration - **Slack:** Daily Active Teams (2,000+ messages) - **Notion:** Weekly Active Users creating docs - **design tool:** Weekly Active Designers - **Asana:** Tasks completed per week ### Marketplace / Transaction - **Airbnb:** Nights booked - **Uber:** Completed trips - **Etsy:** Gross Merchandise Value (GMV) - **DoorDash:** Orders completed ### Media / Content - **Netflix:** Hours watched per member - **Spotify:** Hours listened per subscriber - **Medium:** Time reading articles - **YouTube:** Watch time ### SaaS / B2B - **Salesforce:** Active users per account - **HubSpot:** Weekly active contacts managed - **Stripe:** Payment volume processed - **Dropbox:** Active files shared --- ## Red Flags: Bad North Star Metrics ### ❌ Revenue as North Star **Problem:** Revenue is an outcome, not a value metric - Doesn't tell you WHY customers pay - Can go up even if product value decreases (price increases) - Lagging indicator (slow to respond) **Exception:** Marketplaces where GMV = value delivered --- ### ❌ Number of Features Used **Problem:** More features ≠ more value - Can be gamed by adding trivial features - Doesn't capture depth of value **Better:** Usage of core feature --- ### ❌ Vanity Metrics (Signups, Downloads, Page Views) **Problem:** No correlation to actual value or retention - Can grow while business dies - Doesn't reflect customer success **Better:** Activation rate, active users --- ## From North Star to Execution Once you have your North Star, break it down into input metrics: ### Example: Airbnb's "Nights Booked" **Input Metrics (things that drive Nights Booked):** 1. **Supply side:** - Active listings - Listing quality score - Host responsiveness 2. **Demand side:** - Search-to-booking conversion - Repeat booking rate - Average trip length 3. **Trust & safety:** - Review ratings - Dispute rate - Insurance claims **Each team owns input metrics that ladder up to North Star.** --- ## How Teams Use the North Star ### Product Team: "Will this feature increase Nights Booked?" - If yes → prioritize - If no → deprioritize ### Marketing Team: "Will this campaign bring users who book nights?" - Focus on qualified traffic, not just signups ### Engineering Team: "Will improving performance increase Nights Booked?" - Faster search → more bookings → prioritize ### Customer Success: "Are our customers booking nights regularly?" - If not, something's wrong with value delivery --- ## Evolving Your North Star **Your North Star should evolve as your company matures:** **Early stage (0-100K users):** - Focus: Activation and retention - North Star: Weekly Active Users **Growth stage (100K-1M users):** - Focus: Sustainable growth loops - North Star: Weekly Active Users engaging with core feature **Scale stage (1M+ users):** - Focus: Monetization and expansion - North Star: Revenue per active user OR engagement + monetization hybrid **Enterprise stage:** - Multiple North Stars for different business units --- ## Real-World Example: Slack **Slack's North Star Evolution:** **2014-2015 (Early):** - North Star: Teams sending 2,000+ messages - Why: Indicated real team adoption **2016-2018 (Growth):** - North Star: Daily Active Teams (2,000+ messages) - Why: Added frequency dimension **2019-2021 (Scale):** - North Star: Weekly Active Users + Messages sent - Why: Balance growth with engagement **2022+ (Enterprise):** - North Star: Active paid seats - Why: Focus on monetization at scale **Key insight:** North Star evolved with company stage --- ## Worksheet: Define Your North Star ### 1. Core Value What problem do you solve? \***\*\_\_\_\*\*** ### 2. Core Action What do users do when they get value? \***\*\_\_\_\*\*** ### 3. Retention Correlation What action correlates most with retention? \***\*\_\_\_\*\*** ### 4. Frequency How often should users do this action? \***\*\_\_\_\*\*** ### 5. Breadth Who needs to do this? (Individual, team, transaction) \***\*\_\_\_\*\*** ### 6. North Star Candidate **Formula:** [Frequency] × [Core Action] × [Breadth] --- ### 7. Validation Checks - [ ] Measurable? (Can we track it?) - [ ] Actionable? (Can teams influence it?) - [ ] Leading indicator? (Predicts retention/revenue?) - [ ] Understandable? (Everyone gets it?) - [ ] Sustainable? (Reflects real value?) ### 8. Tradeoff Test Describe 2-3 hard decisions your North Star should help you make: --- --- ## Alternative: Constellation of Metrics **If a single North Star doesn't work for you, use a constellation:** **Example: Amazon** - Customer satisfaction (NPS) - Selection (# of products) - Price (value for money) - Convenience (delivery speed) **Rule:** No more than 4 metrics in your constellation - More than 4 = unfocused strategy --- ## Guardrail Metric Guidance **Every North Star needs 2-3 guardrail metrics to prevent destructive optimization.** Without guardrails, teams will find ways to game the North Star that hurt the business. The question to ask: "If we aggressively optimized [North Star], what could go wrong? That is your guardrail." **Common guardrail patterns:** 1. **Quality metric** (e.g., NPS, CSAT, support ticket volume) -- Prevents growth at the expense of user satisfaction. Example: If North Star is "Weekly Active Users," a guardrail of "NPS stays above 40" prevents acquiring low-quality users who churn immediately. 2. **Revenue/monetization metric** (e.g., ARPU, conversion rate, LTV) -- Prevents engagement optimization that does not generate revenue. Example: If North Star is "time spent in app," a guardrail of "ARPU stays above $12/mo" prevents building addictive features that do not convert to paid. 3. **Efficiency metric** (e.g., CAC, cost per transaction, infrastructure cost per user) -- Prevents growth that is not sustainable. Example: If North Star is "completed transactions," a guardrail of "CAC stays below $50" prevents buying growth that does not pay back. **How to define guardrails:** - Set a minimum threshold (floor), not a target. Guardrails are "do not go below X," not "try to reach Y." - Define what happens if breached: who gets alerted, what investigation to run, and what corrective action to take. - Review guardrails quarterly. As the product matures, guardrail thresholds may need adjustment. --- ## Output Template ### North Star Metric Analysis: [Company Name] **Recommended North Star:** [Metric Name] **Formula:** [How it is calculated] **Current Value:** [Baseline] **Target:** [Goal + timeline] #### Validation - Core Value Test: [Pass/Fail + reasoning] - Leading Indicator Test: [Pass/Fail + reasoning] - Tradeoff Test: [Pass/Fail + reasoning] #### Input Metrics (Driver Tree) | Input Metric | Current | Target | Owner | Leading Indicator For | | ------------ | ------- | ------ | ------------- | --------------------- | | [Metric 1] | [Value] | [Goal] | [Team/Person] | [What it predicts] | | [Metric 2] | [Value] | [Goal] | [Team/Person] | [What it predicts] | | [Metric 3] | [Value] | [Goal] | [Team/Person] | [What it predicts] | #### Guardrail Metrics | Guardrail | Why | Threshold | Action if Breached | | ------------------- | ---------------------------- | --------------------- | --------------------------------- | | [Quality metric] | [Prevents what failure mode] | [Do not drop below X] | [Who investigates + what they do] | | [Revenue metric] | [Prevents what failure mode] | [Do not drop below X] | [Who investigates + what they do] | | [Efficiency metric] | [Prevents what failure mode] | [Do not drop below X] | [Who investigates + what they do] | #### Recommendation [2-3 sentences on whether to adopt/keep/change the North Star, with timeline for review. Example: "Adopt Weekly Active Teams as your North Star for the next 6 months. Review at the end of Q3 to determine if the metric still reflects core value delivery as you move into enterprise. Schedule a North Star review meeting for September."] --- ## Common Mistakes ❌ **Changing your North Star every quarter** - Causes whiplash across teams - Choose one and stick with it for 6-12 months ❌ **Having different North Stars by team** - Defeats the purpose of alignment - Everyone should rally around one metric ❌ **Making it too complex** - If it requires a 10-minute explanation, it's too complex - Should fit in one sentence ❌ **Ignoring guardrails** - Optimize for North Star, but don't break the product - Always have 3-5 guardrail metrics --- ## Output Integration ### Where Files Go **North Star definition:** - Save to: `thoughts/shared/pm/metrics/north-star-[quarter].md` (your working definition) - Share widely: This becomes the basis for all team metrics ### Link to Other Work After defining North Star: - **Reference in strategy** - "Our North Star metric is [X]" in `/write-prod-strategy` - **Guide PRDs** - All feature PRDs should explain how they support North Star - **Inform roadmap** - Roadmap priorities are evaluated by North Star impact - **Dashboard anchor** - North Star sits at top of your metrics dashboard ### Cross-Skill Integration **Feeds into:** - `/write-prod-strategy` - North Star becomes the Objective component - `/metrics-framework` - North Star is your lagging metric anchor - `/feature-metrics` - Feature success metrics should ladder to North Star - `/catalyst-pm-ops:status-update` - Progress toward North Star is tracked in updates **Pulls from:** - [[business-info-template]] - Business model informs what matters - `thoughts/shared/pm/metrics/` - Historical data validates metric choices - `/retention-analysis` - Understand what drives long-term success - `/activation-analysis` - Early indicators of North Star movement --- ## Related Skills - `/activation-analysis` - Find your activation metric - `/feature-metrics` - Choose experiment metrics that ladder to North Star - `/metrics-framework` - Understand leading vs lagging metrics - `/retention-analysis` - Measure what drives retention and North Star - `/write-prod-strategy` - Connect North Star to strategy --- --- ## Output Quality Self-Check Before delivering the North Star analysis, verify: - [ ] **Metric is one sentence:** The North Star can be stated in a single clear sentence (e.g., "Weekly Active Teams sending 2,000+ messages"). If it needs a paragraph to explain, it is too complex. - [ ] **Formula is explicit:** The calculation is defined precisely enough that an analyst could implement it in SQL. No ambiguity about what counts and what does not. - [ ] **Baseline and target are included:** Current value and target value with timeline are both specified. "Improve engagement" is not a North Star. - [ ] **Three validation tests passed:** Core Value Test, Leading Indicator Test, and Tradeoff Test are each explicitly addressed with pass/fail and reasoning. - [ ] **Input metrics defined:** At least 3 input metrics are identified with owners, showing how teams can influence the North Star. - [ ] **Guardrails defined:** 2-3 guardrail metrics are specified with thresholds and breach actions. A North Star without guardrails is dangerous. - [ ] **Tradeoff scenario tested:** At least one real decision scenario is described where the North Star helps choose between two options. If it does not help decide, it is not working. - [ ] **Review timeline set:** A specific date to revisit the North Star is recommended (typically 6-12 months). --- **Framework credit:** Adapted from Aakash Gupta's North Star Metric framework. Read the full article: https://www.news.aakashg.com/p/do-you-really-need-a-north-star-metric