North Star Metrics

Question 1

B2C Subscription

Answer 1

North Star Metric: Engagement
Example: Music service: hours of music played
Why: Free users that find value will become paid users

Question 2

B2C Other

Answer 2

North Star Metric: Monetization
Example: Consumer Product: Customer Acquisition Cost, Lifetime Value, margins
Why: Need cashflow to fund growth

Question 3

Enterprise Software w/ Network Effects

Answer 3

North Star Metric: Recurring visits
Example: Enterprise messaging - Share, number of teams using, weekly active users
Why: Get users with a freemium model and convert to paid at a certain tipping point

Question 4

Enterprise Software w/o Network Effects

Answer 4

North Star Metric: Monetization
Example: CRM - revenue, number of paid users
Why: Revenue drives R&D, which creates product differentiation

Question 5

User-generated Content

Answer 5

North Star Metric: Content Created
Example: Video site: videos uploaded, Message board: posts
Why: Content creation drives consumption, consumption drives ad revenue

Question 6

E-commerce and Two-sided Marketplace

Answer 6

North Star Metric: Transaction volume
Example: Used goods marketplace: Gross Merchandise Value, Ride sharing: Trips
Why: Get a cut of each transaction

Question 7

Cloud Platforms

Answer 7

North Star Metric: Transactions
Example: API service: API calls, Storage provider: storage consumed: Credit card processor: card payments processed
Why: Cloud platforms are paid per transaction

Question 8

Mobile

Answer 8

North Star Metric: Acquisition, engagement
Example: Video game: Daily active users, session length, Customer acquisition Cost
Music service: hours of music played
Why: Free users eventually pay to play