A well-defined North Star Metric isn’t just another metric to track—it’s a guiding force.
It brings clarity to your goals and decisions while keeping you motivated during highs and lows. Most importantly, it ensures you stay aligned with what really drives success in your business.
Let’s explore why a North Star Metric is necessary, provide some real-world examples, and show how it can inspire growth for you and your team.
1. What Is the Purpose of a North Star Metric?
As the name suggests, a North Star Metric provides guidance.
It’s not just another performance indicator—it’s your "true north," steering your business toward sustainable growth.
Here’s why having one matters:
- To stay focused on your mission: A strong North Star Metric reminds you of the purpose behind your work. It’s the perfect antidote to low-energy phases or when business challenges arise.
- To simplify decision-making: When presented with a choice, your North Star helps clarify what really matters in the long run. You simply ask: What will impact my North Star Metric the most?
That’s why the best North Star Metrics don’t get bogged down in the nitty-gritty. Instead, they focus on the core value your business delivers.
2. Tailor Your North Star Metric: Be Creative
A North Star Metric should be personal and relevant to your unique needs, goals, and business model.
Take inspiration from this LinkedIn post by Sebastian Hewing, where he shares how he defined his very personal "Optionality Coefficient" as a way to measure success:
"Three years ago, I defined my North Star Metric: The ‘Optionality Coefficient.’
This metric has two components:
- Percentage of Maximum Awesome Lifestyle Costs Earned: Does my income sustain the lifestyle I want?
- Percentage of Awesome Hours: How much of my time am I spending doing things I want to do?
I aim for the first number to be above 100% and the second above 80%."
For Sebastian, his business is deeply tied to his personal well-being. His North Star Metric isn’t about tracking endless revenue growth—it’s about ensuring his life is financially secure and fulfilling.
The takeaway? Your North Star doesn’t need to look like anyone else’s. It should reflect your core values and what really drives your success.
3. Identifying Your Own North Star Metric: It’s Not Always Just About Revenue
If you’re an entrepreneur running a business with employees and thinking: “Great for Sebastian, but I manage a team. I need something more business-focused—like revenue,” you’re right… or are you really??
Revenue is an obvious top priority—but a North Star Metric is about understanding what drives that revenue sustainably.
For example:
- What actions actually lead to revenue growth?
- What is the value you’re delivering to your customers that drives this growth?
That’s where your North Star Metric comes in.
It’s not just a snapshot of revenue; it reflects the underlying drivers of how you’ll achieve it.
As part of my work with Alexej, we help businesses identify their growth levers and capture these in clear North Star Metrics.
One element Alexej often emphasises is customer happiness, often measured using Net Promoter Score (NPS).
Why so?
Because €10,000 revenue ≠ €10,000 revenue.
Let me explain.
Revenue earned from satisfied, engaged customers carries far more potential for long-term growth than one-off transactions:
- Customer Retention: Happy customers return. They might buy again tomorrow, meaning today’s €10K becomes €20K over time.
- Customer Recommendation: Satisfied customers are your best ambassadors and might recommend your business. Word-of-mouth leads or referrals cut acquisition costs significantly.
You see now that €10,000 revenue from happy customers bring more value, and will bring more revenue in the future to your business compared to €10,000 from unhappy (or indifferent) customers.
But this is only an example. Customer happiness might not be relevant for your business.
It is therefore very important to understand the growth levers of your business.
4. Final Thoughts: A North Star Built for Your Business
A North Star Metric should bring:
- Clarity
- Focus
- Motivation.
It provides a clear direction when you’re feeling stuck or unsure and forces you to keep your priorities straight.
Now it’s your turn:
- What’s your North Star Metric?
- What’ are your true business growth levers?
