Counter Metric vs North Star Metric — What’s The Difference And Why You Need Both
What’s the difference between a Counter Metric vs North Star Metric?
While having a North Star Metric helps your team focus on one big direction for your product, a Counter Metric keeps you in check, making sure you don’t over-optimize just for the sake of one metric, missing key aspects of your SaaS business growth.
In this article, we’ll go over how these two metrics are different, why you need both, and how to choose them.
Let’s get right into it!
TL;DR
- A North Star metric predicts long-term company performance and allows a product manager to gauge the success of a product team.
- A Counter Metric prevents over-optimization of your primary metric so that it does not harm other aspects of your business.
- North Star Metrics keep your company aligned, while counter metrics keep your company healthy and headed for growth.
- Tracking a counter metric will help you identify when a positive trend in your north star metric causes a negative trend in any other business aspect.
- Good examples of counter metrics include countering trial signup conversion rate with paid subscription conversion rate, Monthly Active Users with product feature usage, and Development velocity with the number of bugs found.
- B2B and B2C brands have different focal points when it comes to selecting North Star metrics.
- Userpilot can help you track and improve your product adoption and engagement metrics, allowing you to drive adoption and influence your North Star metrics and Counter metric goals.
What is a North Star Metric?
A North Star Metric (NSM) represents the key measurement that assesses the success of your product and business as a whole.
A company’s long-term success can be predicted by North Star metrics, which create a relationship between revenue, customer values, and product goals.
There’s a reason this metric is named after the anchor of the northern sky.
Your north star metrics should help you connect your product to your customers and internal stakeholders. It can offer clarity to your product management team about what requires optimization and what doesn’t.
What is a Counter Metric?
A Counter Metric is what you measure to ensure that when you optimize your primary metric, you’re not causing harm to another aspect of your business.
It acts as a guardrail to help you preserve other business outcomes so that they aren’t negatively affected by a change in your primary metric.
One of the most important aspects of a counter metric is that it can offer context to any assumptions you measure, giving you an overall picture of your data.
Counter Metric vs North Star Metric
Sean Ellis, the author of “Hacking Growth”, describes NSM as a single metric that best captures the core value that your product delivers to customers.
Usually, you should have a single North Star Metric for the whole company.
This ensures that the company focuses on one direction that drives rapid and sustainable growth. This also means that north star metrics should be a leading indicator of business growth.
But it’s not always easy to boil down business growth to a single metric.
Especially if you’re offering a wide range of products or services that cater to different segments of consumers, solving different types of needs.
In such cases, it can be hard for each department to directly correlate their effort to one metric.
To tackle this issue, you can choose “One Metric That Matters” (OMTM) for each department to focus on, which directly impacts the North Star Metrics.
This will help each person in the company identify which metrics they should track on an individual level. Consider the OMTM as the north star metric of each department or team.
But a counter metric is quite different from the north star or even OMTM.
A counter metric is set to make sure you are not optimizing for a metric while forgetting about other important aspects of your business.
For example, if your North Star is Monthly Active Users (MAU), make sure to set a counter metric to track core feature usage as well.
Why do you need both a North Star and a Counter Metric?
Julie Zhuo offers us a critical piece of advice in this regard:
For each success metric, come up with a good counter metric that would convince you that you’re not simply plugging one hole with another. For example, a common counter metric for measuring an increase in production is also measuring the quality of each thing produced. — Julie Zhao
While a good North Star metric can help you align your entire company and help narrow the focus, it can create tunnel vision and can harm other aspects of your business.
This is where the counter metric comes in.
The value of your North Star metric can increase greatly when paired with a compelling counter metric as it will help you stay focused and optimize your efforts towards the entire business’s success.
It’s very easy to get carried away by a constant increase in figures when you’re measuring just one metric. Counter metrics help you stay grounded in this regard.
At times, a positive trend in your north star metrics can also cause a negative trend in another business aspect. Tracking a counter metric will help you identify this and take action before it’s too late.
How to decide on your Counter Metric
After following the north star framework to choose your key metric, you need to pay attention to your overall business and product goals when you’re choosing counter metrics.
Most importantly, you need to avoid choosing vanity metrics.
Your counter metrics need to be directly derived from your business, measurable and actionable.
Derived from your business — the metric needs to have a direct impact on your business growth, otherwise, you’ll just be measuring something that’s not relevant.
Measurable — if you can’t track it, then you can’t use it to know if you’re heading in the right direction.
Actionable — it needs to give you enough insights into what needs to change and in which direction you need to direct your attention,
If you notice an upward trend in your North Star Metric, but it’s also having a negative impact on your counter metric, then you’re not doing something right.
Choosing the right metrics will help shift your attention where it matters.
Now let’s look at some examples to make this easier to understand. I will start with North Star metrics as these come first.
North Star Metrics examples
The approach to selecting a good north star metric differs from company to company — especially between B2C and B2B companies.
Here are the north star metrics for some of the most well-known brands around the world including Airbnb, Coinbase, Netflix, Spotify, and more.
You’ll notice that social media companies like Facebook, Instagram, and Twitter measure Daily Active Users as their north star metric. Daily Active Users gives these companies a crucial measure of the product engagement level, which fuels their entire business model.
On the other hand, companies like Airtable and Amplitude use a revenue metric as their leading indicator.
Let’s look at some examples of product north star metrics used by successful businesses.
Miro’s North Star Metric example
Miro is a visual collaboration software that uses “number of collaborative boards” as its key metric. This metric puts inter-organization virality at the core of its growth strategy.
When choosing your metric, you need to ask yourself this question: What jobs do our users need our product to do?
In the case of Miro, the answer is allowing users to collaborate with their colleagues remotely.
As collaboration is at the heart of Miro’s product as well as user needs, it makes sense for Miro to use “collaborative boards” as its leading indicator of success.
Amplitude North Star Metric example
Amplitude is a subscription product catering to the B2B market. It focuses on “Weekly Learning Users” as its North Star Metric. These are the users who consume and share more than three charts per week.
Amplitude focuses on “easily answering questions on what drives behavior and powering a better customer experience” as its customer value.
Choosing “weekly learning users” as their crucial metric helps them to understand how many users they are helping to realize the value of their product better.
Airtable North Star Metric example
Airtable, another collaboration tool for the B2B market, focuses on “Weekly Paid Seats” as its north star metric. It’s common for companies like Airtable to focus on paid customers for their north star metric.
Measuring weekly paid users offers Airtable insights on how product usage on paid plans is spread within organizations.
Some companies, however, are more focused on the active paid users rather than just paid users. This occurs when companies identify a noticeable connection between inactivity and user churn.
Examples of Counter Metrics
With your one North Star Metric in mind (yes, you should only focus on one!) let’s look at some examples of good counter metrics that will help keep your product strategy going in the right direction.
Counter trial signup conversion rate with paid subscription conversion rate
Trial signup conversion rate is not a very specific metric to determine growth unless you counter it with your paid subscription rate (how many new users actually convert to paying customers).
Why?
You might suddenly notice a surge in user numbers following successful marketing campaigns. But these numbers don’t mean anything unless you’re getting paying customers out of them.
Consider this scenario.
You’ve offered a lucrative trial plan, and lured in tons of users over a short time. But a majority of them are likely to not return to your product after the trial period ends, or even after they signed up and logged in once.
Measuring paid subscription conversion rate as a counter metric thus allows you to get an accurate picture of your conversions and customer base increase. This is a good example of why driving your north star metric upwards shouldn’t be your only focus.
Counter MAUs with product feature usage
Monthly active users (MAUs) — as important as it may be — can be very misleading indicator at times.
Getting your registered users back in your app isn’t the hard part. An effective reengagement campaign can get a lot of them back.
But are they active users or even barely using your product?
They might even not be aware of what the key features of your app are. Measuring product feature usage as a counter metric helps you measure user actions and compare how many of your users are actually using and engaging with your app.
Counter Development Velocity with number of bugs found
What’s the use of rapid development if your product’s quality decreases?
You might be inclined to set product development velocity as your north star metric. A good and compelling counter metric to this could be the number of bugs at each release.
This way you are tracking your business success based on how fast your product is being released on the market, along with its quality. This works as a reminder that how fast you ship shouldn’t come at the cost of sacrificing your product quality.
How to track and improve your North Star Metric and Counter Metrics
As you can see from the examples above, most North Star metrics are influenced by engagement and product usage.
If you want to track and improve your product adoption and user engagement metrics, use a tool like Userpilot.
Userpilot allows you to set goals and track the metrics that drive impact on your product growth.
You can then track in-app activity and build in-app guidance and onboarding flows like product tours, modals, and tooltips. This will help you drive adoption and will directly impact your North Star metrics and Counter metric goals.
Wrapping Up Counter Metric vs North Start Metric
North Star metrics offer you an anchor that your company can use to navigate. But you need something that helps you make sure you’re going in the right direct.
To avoid chasing after a vanity metric, make sure you’re choosing counter metrics that are critical, measurable, and actionable.
Want to build in-app product experience flows to drive engagement and directly impact your North Star Metric? Get a Userpilot Demo and see how easy it is to get started!
