By maintaining a laser focus on a single metric for too long, teams risk short-term thinking, missing new opportunities, and sacrificing the user experience.

Broadly, there are six categories of North Star Metrics

The #1 question to start with: Which metric, if it were to increase today, would most accelerate my business’ flywheel?

Marketplaces and platforms
Most common North Star Metric: Consumption growth

Paid-growth driven businesses
Most common North Star Metric: Growth efficiency

Freemium team-based B2B products
Most common North Star Metric: Engagement and/or customer growth

UGC subscription-based products
Most common North Star Metric: Consumption

Though consumption and engagement are similar metrics, the former is much more active — creating a video, for example, rather than merely visiting the site. Consumption is more likely to result in users sharing the content, thus driving the growth flywheel.

Ad-driven businesses
Most common North Star Metric: Engagement

Facebook and Snap target DAU because, for better or worse, social media is a daily habit for most. Meanwhile, Pinterest looks at WAU, since it doesn’t expect its users to need the product daily.

Consumer subscription products
Most common North Star Metric: Engagement or customer growth

Products that differentiate on experience
Most common North Star Metric: User experience

An alternative approach to choosing your North Star Metric is to ask yourself: What jobs are our users hiring our product to do?

It’s a way of identifying the driver behind a given purchase or usage and optimizing for that in a way that your competitors can’t or won’t.

companies like Airbnb, Miro, Netflix, Tinder, and Spotify purposely avoid concentrating on revenue

Focusing on revenue goals too early can lead to suboptimal decisions, such as spending too much time optimizing pricing — or being afraid to lower pricing

There’s typically only one North Star Metric

Having that single focal point often leads to a more cohesive planning and decision-making strategy, company-wide.

Once you have your North Star Metric (an output), your next step is to break this metric down into its component parts and decide which metrics (the inputs) to invest in.

Whenever you have a candidate for your North Star Metric(s), determine what levers move this metric, and then focus your ideation around those input metrics.

In the earliest stages of a company, however, before you’ve found the fabled product-market-fit, your singular aim should be answering one question: “Am I building something people want?”

I recommend you start by focusing on “cohort retention” — are enough people sticking after using your product? If you can’t get people to stick around, nothing else will matter in the end.