This document discusses identifying a North Star Metric (NSM) and using a growth model to move the NSM. It defines an NSM as a single persistent metric that reflects sustainable growth based on delivering value to users. Examples of good NSMs for Facebook and Uber are provided. A case study shows how LogMeIn grew by focusing on usage as their NSM. Benefits of using an NSM include tying marketing ROI, retention, and evangelism to delivered value. A growth model is then presented as a tool that contains inputs and outputs over time to forecast how changes to growth levers may impact the user base and NSM over time.

1. Identifying your North Star
Metric & Using a Growth
Model to move it
Presented by:
Sean Ellis
@SeanEllis
CEO & Founder
GrowthHackers
Chris More
@ChrisMore
Head of Growth for Firefox
Mozilla

2. Identifying your
North Star Metric (NSM)

3. North Star Metric
Overview
1. What is it?
2. Examples
3. Case study on
business impact
4. Benefits

4. Most important concept in growth
North Star Metric
- Focal point of fastest growing businesses
- Opposite of a vanity metric
- All important metrics key off of the NSM

5. What is a North Star Metric?
- Single persistent metric for real growth
- Reflects growing footprint of
aggregated value
- A way of measuring sustainable growth
based on value

6. Examples of Good
North Star Metrics
Facebook
- Value: see friends’ updates
- NSM = Daily Active Users (DAU)
- → to value: 7 friends 10 days
Uber/Lyft
- Value: $ for drivers, rides for riders
- NSM = Weekly rides
- → to value: First ride/passenger

7. Examples of Poor
North Star Metrics
- Registrations
no value delivered
- Repeat usage rate
new users not considered
- Average purchase size
new not considered

8. How to determine a good
North Star Metric
Step 1:
Start with finding value (key “must have” benefit)
Step 2:
Find metric that quantifies delivery of this value

9. LogMeIn Case Study
- Initially marketing focused on
registrations
- Most new registrations never
used product
- CEO refocused team on
growing usage (NSM)
- Focusing on usage NSM =
hockey stick growth
- Today a $6B value business

10. Benefits of using a
North Star Metric
- Marketing ROI
tied to value delivered
- Customer retention
tied to value delivered
- Customer evangelism
tied to value delivered

11. NSM is a full company metric
Not just a marketing metric
- Marketers only influence subset of NSM levers
- Right NSM aligns full company to deliver value
- All teams should evaluate their impact on NSM

12. Using a Growth Model to
move the North Star Metric

13. Growth Model
Overview
1. What is it?
2. Benefits
3. Using a model

14. What is a growth model?
- A critical tool for growth teams
- Contains inputs, outputs over time
- Tailored to each product and primary growth levers
- Calculates growth ratios between inputs and outputs
- Mathematical representation of your user base

15. Example DAU growth model of baseline user base

16. Growth Model Benefits
- Source of truth
- Forecast changes in user base
- Data-driven planning
- Focuses teams on outcomes (instead of local maxima)
- Sizes up potential “what if..” growth lever changes

17. Example “what if” scenario of a positive change in retention

18. Example “what if” scenario of a negative regression in acquisition

19. Example “what if” scenario of a positive retention + negative acquisition change.

20. Example “what if” referral loop went viral D30+

21. Real questions from Mozilla’s marketing and product team.
“How much would we need to improve our acquisition and retention rates to
hit our 2017 key results in December?”
“In Q1, we acquired 300k incremental downloads of Firefox from new
channels, how much did my team contribute to our DAU targets?”
“A recent A/B onboarding test show a 5% improvement in retention after week
3. If we launch it in July, how will it impact DAU in December 2017?”
“Should we invest in optimizing our acquisition funnel for the United States or
Germany in Q2?”
Using a Growth Model

22. 1. Determine what is “acquisition” for your product
2. Input real acquisition and retention cohorts over time
3. Perform calculations from launch to far future
4. Understand key ratios and growth rate (or stall)
or...
Follow @chrismore on twitter as I will announcing an open
source growth model.
Building a Growth Model

23. Steps
1. Determine NSM user event
2. Use NSM event as acquisition
3. Use NSM retention input
4. Understand growth ratios
5. Size up NSM hypotheses
Using a model to
move the NSM
A model within a model

24. Example of NSM user model (segment of overall growth model)

25. - A model lets you understand your key variables and how
they impact your growth.
- A model allows your growth team to make more better
decisions.
- After successfully modeling your entire user base, model
your NSM cohorts.
- Remember: keep it simple!
Growth Model Recap

26. Thank you.
Learn more at blog.growthhackers.com.