Choose a North Star Metric

05.02.2016 |

Episode #5 of the course How to Validate an Idea by Ryan Kulp

 

“What gets measured gets managed.” — Peter Drucker

By now, you should be fired up with feedback. While it’s likely you received positive and negative criticisms, do your best to consider all of it as constructive.

At the very least, ignore the haters. But not too much—they might be trying to save you.

Alas, this is the challenge of entrepreneurship. There are no clear answers because there is no boss in the other room telling you what to do. It takes courage and vision to make tough decisions on limited information.

To mitigate this reality of endless unknowns, today we’re going to determine a singular data point by which to measure success for your new business idea.

We’ll call this our North Star Metric.

 

Here are a few examples of north star metrics:

  • Real estate agent: number of open houses

  • Restaurant: average meal check size

  • Email marketer: click-through rate per email

  • Car salesman: test drives per day

  • Tow truck: cars towed per month

 

You’ll notice that each example shares two things: a hard number and a scope of time. In the beginning of a business, per-day metrics can be misleading, while per-month can be agonizing and lagging.

In the early stages, report metrics on a weekly basis. This will account for a blended average of slow days and weekends, and the data collected within a single month should be enough to identify trends and insights.

Naturally, there are dozens (even hundreds) of metrics you could consider while pushing your idea into the market, but it’s common to get trapped in “analysis paralysis” by spending too much time chasing vanity metrics and not enough time focused on the right things.

So pick your North Star Metric and add it to the bottom of your one-page business plan.

 

Recommended book

“Lean Analytics: Use Data to Build a Better Startup Faster” by Alistair Croll

 

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