University:
California State University, Los Angeles
Course:
BUS 5026 | Global Business Environment
Academic year:

2024
Views:

172

Pages:

2
Author:

Mina M.

BASIC CONCEPTS OF NORTH STAR METRICS (NSM) IN BUSINESS A. Definition of North Star Metrics (NSM) According to Grow, north star metrics (NSM) is the single most efficient parameter for predicting a company's long-term success. It is a metric that is specifically able to capture the core value of the product or service that the company will provide to customers. NSM itself was first used by world-class technology companies located in Silicon Valley, United States. They revealed that the metric can help companies move beyond simple growth rates. NSM is actually able to provide solutions to these companies to produce longlasting customer retention numbers. Indirectly, north star metrics can help companies to continue to compete by preparing the best solutions for future risks. B. The Function of North Star Metrics for Companies As Glints has explained, north star metrics is a parameter that you need to understand if you want to enter the business world. However, this metric also has an important role for the company's product team. Why is that? Because, it is able to define the relationship between the customer problem that the product team is trying to solve and the revenue that the business team wants to generate. Well, besides this, generally NSM has three main functions for a company. Here is the explanation according to Amplitude. ● NSM gives companies clarity and alignment on what product teams need to optimize and abandon. ● These parameters can communicate the impact and progress of product value to the entire company. This indirectly results in more buy-in and faster strategic product initiatives. ● NSM drives companies to create products that benefit customers and businesses. C. How to Determine a Company's North Star Metrics After seeing the definition and function for the company, it seems clear that north star metrics is something that must be understood by business and product teams. However, determining them is not an easy task. You and your company have to decide what is really important for business purposes. However, discussing what matters to the company is complex and hard to find. Most companies only emphasize focusing on revenue and not on other things that are also quite important. Well, adapted from the Mix Panel page, here is the most efficient way to determine powerful north star metrics. ● Ask, what is most important for the future of the business? Prioritize and form a custom list. ● What are the KPIs and metrics that will be used to measure the factors at the top of the list? ● What metrics can summarize the company's success in shaping quality products? ● Build a hierarchy of metrics, with NSM as the main parameter. D. Conclusion In essence, north star metrics are the only parameters that companies can use to determine the ultimate value of their products. North Star Metrics (NSM) can also be defined as a parameter to determine the long-term success of a company. The definition of North Star Metrics is based on an explanation from the Grow page. By using this metric, it can help to capture the core value of the products or services that customers receive from the company. Not only that, these metrics also have a number of other functions and benefits.