University:
California State University, Northridge
Course:
MKT 498A | Marketing Internship
Academic year:

2024
Views:

309

Pages:

2
Author:

Amel S.

BASIC CONCEPT OF NORTH STAR METRICS (NSM) IN BUSINESS A. Definition of North Star Metrics (NSM) Adapting from Grow, north star metrics (NSM) is the only most efficient parameter to predict the long-term success of a company. 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 a world-class technology company 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 long-lasting customer retention figures. Indirectly, north star metrics can help companies to continue to compete by preparing the best solutions for future risks. B. Function of North Star Metrics for Companies As Glints has explained, north star metrics are a parameter that you need to understand if you want to enter the business world. However, this one metric also has an important role for the company's product team. Why is that? Because, it is able to define the relationship between customer problems that the product team is trying to solve and the revenue that the business team wants to generate. Well, besides that, generally NSM has three main functions for a company. Here is the explanation according to Amplitude. • NSM gives the company clarity and alignment about what needs to be optimized and abandoned by the product team. • This parameter can communicate the impact and progress of product value throughout the company. This indirectly results in more support and faster strategic product initiatives. • NSM encourages companies to create products that are profitable for customers and businesses. C. How to Determine a Company's North Star Metrics After seeing the definition and its function for the company, it feels clear that north star metrics are something that must be understood by business and product teams. However, determining it is not an easy matter. You and the company must decide what is really important for business needs. However, discussing what is important to the company is complex and difficult 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 effective north star metrics. • Ask, what is most important to the future of the business? Prioritize and form a specific list. • What KPIs and metrics will be used to measure the factors at the top of the list? • What metrics are able to summarize the company's success in creating 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 main value of their products. North Star Metrics (NSM) can also be defined as parameters 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 received by customers from the company. Not only that, these metrics also have a number of other functions and benefits.