Identifying Your North Star Metric: How to Best Measure Your Business’s Growth

Updated: Apr 7

At Cat’s Cove Communications one of the things we often do with our clients is discuss their vision, mission and core values.


You might hear us talk about your ‘Why’ - in other words, why you do what you do.


After all, people don't buy what you do - they buy why you do it.


Business owners often get stuck when it comes to measuring their own success. But if you don't know how to measure whether your business is growing, how do you know when you’ve truly succeeded?


That’s where the North Star Metric comes in.


(Want to see the North Star Metric explained in a video? Click here)





What is a North Star Metric?


The North Star Metric is a measurable framework that you can use with your business to help predict growth. Growth can mean lots of different things: it can mean revenue growth, it can mean increasing clients - but importantly, your North Star Metric cannot be revenue.


Why Can't my North Star Metric be Money?


Well, as a small business, there’s a chance that you’ll have a really good financial day, out of the blue. Maybe it's a customer coming in and spending a lot of money one day, when they normally wouldn’t do so. These days are great, but we can't rely on them happening often, which is why you can’t use them to predict whether or not you're succeeding.


Your North Star Metric has to measure, in some way that is relevant to your particular business, how well you are providing value to your customers.


Let's look to some big companies for examples of North Star Metrics:


Facebook: For Facebook, their North Star Metric is active users. This could be daily, weekly, or monthly, but they use active users to determine whether or not their company is growing.


Spotify: Spotify uses minutes listened as their North Star Metric. In other words, not users, but how long are people spending on their platform.


Zoom: Zoom uses meetings booked. Not how long the meets are but the number of meetings booked.


These are true North Star Metrics because they are predictors of revenue, but most importantly they determine whether these companies are providing value to their customers.

Facebook knows that if you’re continuing to spend time on their platform, it must mean that you’re getting some value from it. For Spotify, the longer you listen, the happier you must be with the podcasts, artists and content on their platform. And Zoom can safely assume that if you’re booking with them and not another platform, you must be relatively happy with the value you’re getting from their platform.


They use their North Star Metric to measure the value they’re providing to their customer. That value will lead to a prediction of revenue, but it is very clearly not money.


Identifying Your Own North Star Metric


As a small business owner, and someone who can’t rely on the same metrics as Zoom or Spotify, how would you measure that value you’re providing to your customer?


Perhaps its how many finished transactions you have on your e-Commerce store daily, weekly or monthly. Or how many repeat customers you have.


If you’re a brick and mortar store, you could measure the number of transactions you have go through your cash register, in other words, the number of people who end up completing a purchase.


Restaurants? Perhaps measure the number of tables that you're turning over each night.


Here at Cat’s Cove we have a white board that we keep all our clients on.


Our North Star Metric is how many active clients we have on this board. The projects could be large or small, but it doesn't matter - if you're a client, you're on the board and we use this to measure the value we are providing.




Supporting our North Star Metric


For the clients we work with, we try to provide immense value in hopes that we get repeat business and referrals.


On our social media platforms we try to provide as much value as possible so that we might receive inquiries from people in need of help.


And we also support our North Star Metric by actively looking for new business; through writing proposals, talking to the public, sourcing new business in different ways.


These are the ways we drive our day to day operations to support our North Star Metric, which is monthly active clients that we’re working with.


If we can continue to grow our monthly active clients on our white board, for us, we hope that this is a good sign that we’re providing value.


For you, a small business owner, whatever that measure is, it will give you a better idea about whether or not you're on the right path, whether growth is coming, or whether you need to make a few tweaks in order to ensure that metric grows.


Want to discuss your North Star Metric? Get in touch!


Click here to watch Toby explain the North Star Metric.




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