Picking the right north star metric

It's tempting to track the numbers that go up and to the right: total signups, companies created, page views. These look good in board meetings but they don't tell you whether your product is working. The number of customers you acquire means very little if most of them never come back.

What matters is what happens after signup: whether customers activate, use the product and stay. A company that signs up 300 new accounts in a quarter but only converts 60% of them into active users has a very different story from a company where 95% of signups are trading regularly within a month.

One of the most underrated metrics in product management is the ratio of weekly active users to monthly active users (WAU/MAU). It measures stickiness, meaning how habitually your customers use your product. A WAU/MAU ratio of 50% means half your monthly users are engaged every week, which is a number worth having.

If that ratio holds steady as your total user base grows, you're attracting the right customers and keeping the pot undiluted. Consistent, engaged customers remain the norm, and casual users and one-hit wonders stay the exception.

Your north star metric should capture the core value your product delivers to customers. For a ticketing platform, it might be total tickets sold. For a CRM, it might be deals closed by users. For a collaboration tool, it might be active projects. It should measure the thing customers care about. A proxy for your internal operations won't do.

When you pick the right north star, everything else should follow the same trend: revenue, engagement, retention, expansion. If those metrics diverge from your north star, either you've picked the wrong one or something structural needs attention.

A good north star metric guides product decisions and also aligns every other team. Engineering should understand that the features they build need to move the north star. Customer success should know that deeper engagement directly drives it. Sales should focus on winning the kind of customers who will contribute to it.

When your revenue model is tied to customer activity (percentage-based fees, usage pricing, transaction volumes), this matters even more. Everyone earns when the north star moves, so growth becomes everyone's job.

The north star gives you direction, but you also need to understand what sits underneath it. If your north star is items sold, you need to see the breakdown: core transactions, ancillary products, fees, point-of-sale volumes. Each layer tells a different story about where growth is coming from and where the opportunities are.

You might discover that ancillary revenue streams are growing faster than your core product, suggesting new product investment areas. Or that one category is flat while everything else grows, signalling a problem to investigate.

The north star gives you the headline; the layers beneath it tell you what's behind it.

A north star metric isn't permanent. As your product matures and your market evolves, the thing that best captures value delivered might change. Early-stage products might track activation. Growth-stage products might track engagement or transaction volume. Mature products might track expansion revenue or net retention.

The signal that it's time to revisit is when your north star is consistently moving in the right direction but your business outcomes aren't keeping pace, or when teams have started optimising for the metric at the expense of the things it was meant to represent.