KPIs can be difficult to communicate – particularly across a large ecosystem. A North Star metric could potentially get around this problem, if you can properly isolate it.
A North Star metric is a single metric which represents the most crucial element in deciding whether a lead is a customer, or whether they bounce. This could cover either initial lead-to-sale conversion, or ongoing purchases.
If the key to growing any business is gaining and holding onto customers, the North Star metric points you towards that goal.
It is imperative to understand that a North Star metric will always be different from company to company, because the audience of every company is also different. There could even be situations where a feature or quality is loved by customers of Brand A, but hated by customers of Brand B. Your North Star metric will be unique to you, your ecosystem, and your buyers.
This is also an intensely data-focused process. You won’t find your North Star metric solely by following your gut! You need a strong data analytics suite and, of course, the data to match. Finding the metric will also take time and isn’t something that should be rushed. It may be best to follow a process like this:
1. Talk to people.
Talk to customer service reps, sales reps, and if at all possible, to actual customers via surveys. Get a good idea what features, qualities, or other attributes of your product are the most liked and appreciated.
2. Explore your numbers.
Create data comparisons looking at the features you uncovered in #1 versus actual patterns in usage, sales, or lost customers. You’ll probably find that at least some of the attributes mentioned turn out to be unimportant when it comes to conversion and retention. Focus on those where you can find a strong correlation between the attribute and positive buyer behavior.
3. Run tests.
Depending on your area of business, you may be able to run live tests – try emphasizing certain attributes in your outreach, and see if it makes a difference to conversion\retention. Otherwise, keep crunching the numbers along with statistical-significance tests to see if you can nail down the most crucial factors.
When you think you’ve spotted your North Star metric…
4. Observe and Monitor.
Business changes fast, so even if you have found a good North Star, it might not always remain northerly forever. Always keep an eye on that metric for signs of instability, or that other business factors are influencing it.
At this point, however, you should be able to start emphasizing your North Star metric in your own communications with your partners, and telling them to watch it as well. This will keep them on-course, but without burdening them with huge amounts of information to track. Plus, they’ll also be able to watch out for deviations.