The ONE Number to Grow Your Company – the Northstar Metric

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The importance being placed on metrics is growing at a tremendously rapid rate. There’s so many metrics available in today’s sales organizations that trying to determine which ones you should be paying attention to can become a headache. So, where should you start?

For door-to-door sales teams, there’s 3 metrics you must know to measure success and  a fourth metric that is important to track as well.

With the hundreds of metrics out there at your disposal having focus on one can bring some clarity to your team.

One of the newest metrics that has paid dividends for companies in recent years is called the North Star Metric, also called NSM. The metric originated in Silicon Valley not long ago by companies who were experiencing breakout growth and acceleration.

According to Sean Ellis of GrowthHackers, “The North Star Metric is the single metric that best captures the core value that your product delivers to customers” (2017).

To simplify it, the NSM is the one metric everybody in the company needs to know and live by for your company to grow.

The goal is to get beyond just the basic, surface-level growth with customers who are likely to churn, and focus on long-term customers who are considerably more likely to be advocates for your company.

Think of evangelists, loyalists and promotors of your product and company. These are the type of customers the North Star Metric is focused on generating; the people who are going to be loyal, long-term clients.

These are the clients who go above and beyond to get your company more exposure, provide positive reviews, and refer potential customers to you. You want to focus on and grow this metric because it will be a key component in driving sustainable growth across your entire customer base.

Why NSM Matters

When a lot of companies first hear or read about the NSM, they instantly jump to it being the number of sales their company generates. That is NOT what the North Star Metric is. Remember, the concept behind the NSM is to determine the one thing that will generate growth. The number of sales doesn’t generate growth, it’s a mere byproduct of your results.

Here at SPOTIO, our North Star Metric is the number of happy and engaged daily active users (DAU). This is the one metric that is not only going to help us grow, but also create happy and loyal customers that will stay with us for many years and increase our customer lifetime value (LTV).

The reason happy and engaged DAUs are so critical to our success is because they’re pretty much the cheese to our macaroni.northstar metric

Let me explain. If we have 10,000 users but none of them use the platform, what’s the point?

Sure, we’re collecting money but the system isn’t being used how it’s designed to and we’re destined to fail.

If all 10,000 people use it every day but don’t like it, they’re going to look for other solutions and churn.

If a company signs up but only half of their reps use our platform, the company is going to make the decision to leave. All of these situation, along with others, leave us in an unfavorable position to grow a company and set us on a path of destruction.

On the flip side, if we have users that truly love our product, they’re going to build our brand; they’ll be our advocates. The happier they are, the more they’re going to talk about it. I have an iPhone 7.

When someone with a Galaxy tells me it’s better than an iPhone, what do I do? I tell them “hell no it’s not!” I immediately defend Apple and why my phone is better.

This is what happy daily active users will do for us, and your company, when they’re happy and engaged.

Need more?

Why am I writing this blog post? Sure it’s to inform you and help you grow your business, but it’s also so you’re happy and see more value. See what I did there? 😉

Determining Your North Star Metric

Okay, I get it. You’re not a SaaS company and our NSM means jack to you, but it’s a great example of the thought process used to determine our NSM and why everyone in the company should be focused on it.

For companies in the roofing industry, your North Star Metric may be the number of installed jobs, while a pest control company may be focused on retention rates as their NSM.

An alarm company’s NSM is probably the number of completed installations and the NSM of a solar company may be the customer’s savings on a bill.

All of these industries could use the Net Promotor Score rating as well.  The higher the score the better job you’re doing at satisfying your customer.

I’ll show you one example of a North Star Metric for the door-to-door market.

Solar Industry NSM = Amount of Money Customers Save

To find your NSM, you must determine the things your most loyal customers value most and quantify it into one single metric. Those who switch to solar often do so because of the financial benefits they receive from making the leap.

saving money on solar installationFor example, a 2017 report by Luke Richardson of Energy Sage found that Massachusetts had the highest estimated 20 year savings by switching to solar panels at $30,243. In addition to simply saving money, switching to solar also allows customers to experience other financial gains, like increasing their home’s value and helping them be able to afford the home improvement they’ve always wanted.

A 2015 study conducted by Lawrence Berkley National Laboratory in California found that buyers were willing to pay an additional $15,000 for a home with an average-sized solar panel system. Knowing the financial rewards customers gain is essential to determining your NSM, and why it is often the choice for the solar industry.

As a company, being able to show the customer their estimated savings and how you’re able to save them more money than a competitor will create happy customers that are loyal to your business and give you referrals to grow.

The Entire Team’s Responsibility

Looking at how an organization grows, it’s increasingly evident that it’s not just the marketing department’s responsibility, or the sales department’s, or any other single department. It will be the collective effort of every department within the company communicating together and focusing on one single metric that will drive growth.

Every department within the company needs to be motivated and focused on how they can contribute to delivering value to its customers based on the North Star Metric. You’re about to determine what your NSM is, but to be as effective and efficient as possible across the organization, understanding how to properly motivate employees will be absolutely crucial.

In terms of the different departments, the marketing team is responsible for attracting new customers to the sales department with the NSM in mind. The customer support or service team is responsible for making sure customers are happy with the focus of this metric at the forefront of their conversations.

The North Star Metric gives companies a way for all parts of the organization to communicate with each other in an effort to obtain and work toward a common goal. The NSM is not just a growth driving concept, it’s also a unifier. It allows all departments to be focused on the same end result and tells the entire company what is most important for the company to experience growth with an exact plan of how to get there.


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