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Read Time: 2 Minutes 02.13.2018 Leadership

Drive SaaS Company Growth by Identifying Your North Star Metric

As a SaaS company, are you measuring what matters? In recent years, a concept called The North Star Metric (NSM) has emerged from Silicon Valley. The NSM is defined as the single metric that best captures the core measure of your organization’s growth. It is a critical part of aligning your entire team, determining strategic initiatives, and scaling your company. Here are three keys to identifying, measuring, and improving your NSM:

How To Find Your North Star Metric

The NSM is not necessarily a dollar amount, but a function of the core business activity that drives sustainable long-term growth. So what should your true north be? Whatever you choose as your NSM should inherently tell you how to optimize your product and inform strategic initiatives — from marketing to sales to customer service. It will serve as the one number every member of the team can understand and contribute to driving.

New Call-to-actionFor example, Medium’s metric is "total time reading" and Airbnb’s is "nights booked.” In technology and SaaS companies, the NSM is often related to the user acquisition and engagement. Slack’s key metric is Daily Active Users. HubSpot CRM, a team-focused product, may set weekly active teams as their NSM. Conduct in-depth analyses to define what drives growth at your company, then try to quantify this value in a single metric. That is your NSM.

Using Your North Star Metric to Drive Growth

Once you understand your NSM, it’s important to determine what inputs or variables can actually affect that key metric. These variables can span the entire customer lifecycle. If your NSM is weekly active users of your SaaS product, for instance, look at the steps a buyer needs to go through their decision-making journey. They need to become aware of your products, visit your site, sign up for a trial or demo, then finally convert to a customer.

By breaking your NSM down into these inputs, you will be able to see where bottlenecks occur. Perhaps it’s at the top of the funnel, due to low website traffic. Or you might find that it’s at the very last step in the journey, from demo to purchase, that people are dropping off. Understanding the relationship between these variables lets you see and understand their journey and which levers need to be pulled in order to improve the user experience, optimize conversion rates, and and grow your key metric.

How Marketing Can Contribute to Your NSM

Your NSM can and should determine the day-to-day activities of sales, customer service, product development, marketing and more. When it comes to marketing, that means tracking and improving activities that contribute to your NSM.

If your NSM is related to acquisition or engagement, for instance, then marketing success can be measured through metrics like email click-throughs, time-on-page, form submissions, or page views.

Drill down into your analytics to determine a set of actionable input metrics that your marketing team can impact directly — then start to experiment. Test, optimize, adjust, and change course to figure out what affects your NSM and how. This will help you align your marketing priorities, inform strategy, drive tactics, and give more structure and focus to your teams.

Ultimately, the value of an NSM is as a measure of the health of your business. Almost every team within an organization play some role in tracking, optimizing and improving it — along with all the variables that contribute to it. If you want to learn more about how marketing can play a key part in growing your B2B technology business, start a conversation with us. We’d be happy to help.

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Lane Harbin

Lane Harbin

Digital Marketing Strategist Lane brings her specialties in copywriting, content strategy and inbound marketing to Golden Spiral as our Digital Marketing Strategist.