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North Star Metric (NSM)
Unleashing Success with a North Star Metric: A Guide for Customer Experience Professionals
In the realm of customer experience, understanding the key drivers of success and aligning efforts towards them is paramount.
This is where the North Star Metric (NSM) comes into play.
NSMs are powerful tools that help customer experience professionals navigate their organisations towards meaningful goals and exceptional customer satisfaction.
In this glossary term, we will provide an overview of North Star Metrics, highlight their benefits specifically tailored for customer experience professionals, and present examples of NSMs in action.
Understanding North Star Metrics
The North Star Metric is a high-level, strategic performance indicator that captures the essence of an organisation’s overall goal.
Unlike traditional metrics, NSMs serve as guiding lights, providing a clear direction for businesses to steer towards customer-centricity.
NSMs are outcome-focused, reflecting the ultimate value that an organisation aims to deliver to its customers.
Whilst the example and context of this glossary term is using a North Star Metric to drive customer experience outcomes, a NSM can be used to drive a whole range of different outcomes, for example:
- E-commerce: Value of daily purchases, Customer Lifetime Value, Number of customers each week completing their first order.
- Media: Total read time, total watch time, number of daily active users.
- B2B Saas: Monthly Recurring Revenue (MRR), percentage of three-year retention.
To find your North Star metric, you must decide what is truly essential to the business.
6 Tips on How to Find Your North Star Metric
Discovering the right North Star Metric (NSM) is critical to achieving customer-centric success and elevating your organisation’s performance.
Below are the key steps and strategies to help guide you in finding your North Star Metric, empowering you to align your goals, enhance the customer experience, and drive sustainable growth in your business.
1. Define Your Business Objectives
Begin by clarifying your organization’s overarching business objectives.
What do you aspire to achieve?
Are you focused on revenue growth, customer loyalty, market share expansion, or another strategic goal?
Identifying your business objectives will lay the foundation for selecting an NSM that directly contributes to your desired outcomes.
2. Understand Your Customer Journey
Gain a deep understanding of your customer journey, from the initial touchpoint to long-term engagement.
Use Customer Journey Maps to map out the key stages and touchpoints your customers experience, and identify critical moments that impact their satisfaction and loyalty (we’ve got a great Customer Journey Mapping template you can download).
This analysis will help you identify the stages where your NSM can have the most significant impact.
3. Analyse Key Metrics
Review your existing metrics and identify those that are most closely aligned with your customer journey and business objectives.
Look for metrics that provide meaningful insights into customer behaviour, engagement, and satisfaction.
Consider factors such as customer acquisition, retention, conversion rates, customer lifetime value, and customer satisfaction scores.
4. Evaluate Potential NSMs
Narrow down your list of metrics to a few candidates that have the potential to serve as your North Star Metric.
Assess each metric based on its alignment with your business objectives, its ability to reflect overall customer satisfaction and its measurability.
Look for an impactful, actionable, and relevant metric to your organisation’s success.
5. Test and Iterate
Once you have identified a potential NSM, it’s essential to test its effectiveness.
Implement the metric within your organisation, track its performance, and evaluate its impact on customer satisfaction and key business outcomes.
Iterate and refine your NSM as necessary to ensure it accurately reflects your organisation’s evolving needs and goals.
6. Communicate and Align
To successfully implement your NSM, communicate its importance across your organisation (no point having one if no one knows about it!).
Ensure all teams understand how their efforts directly contribute to the NSM and how it aligns with the broader business objectives.
OKRs can be a useful tool for this.
Foster a culture of cross-functional collaboration, where everyone understands the role they play in achieving the NSM and delivering exceptional customer experiences.
Benefits of using a North Star Metric for Customer Experience Professionals
NSMs enable customer experience professionals to orient their strategies, initiatives, and decisions around delivering exceptional experiences.
By aligning with a customer-centric NSM, organisations can foster a culture that prioritises customer needs, resulting in improved satisfaction and loyalty.
Alignment and Consistency
NSMs serve as a unifying force, aligning teams and departments towards a common objective.
By rallying the entire organisation behind a shared NSM, customer experience professionals can foster collaboration, break down silos, and ensure consistency in efforts, resulting in a seamless and holistic customer experience.
Long-Term Value Creation
NSMs encourage a focus on long-term value creation rather than short-term gains.
By selecting an NSM that reflects sustained customer satisfaction, professionals can make strategic decisions that prioritise building strong customer relationships, fostering brand loyalty, and driving sustainable growth.
Performance Tracking and Accountability
A North Star Metric provides a clear benchmark for tracking performance and accountability.
Customer experience professionals can define specific key results and metrics that align with the NSM, allowing them to monitor progress, identify areas of improvement, and drive continuous enhancement of the customer experience.
Empowered Decision Making
Having a North Star Metric empowers CX professionals to make data-driven decisions.
By leveraging NSMs as a compass, professionals can prioritise initiatives and investments that have the greatest impact on the customer experience, ensuring resources are utilised effectively and efficiently.
Examples of North Star Metrics for Customer Experience
The North Star Metric lends itself exceptionally well to customer experience, and several different CX Metrics could be used.
Net Promoter Score (NPS)
The NPS measures the likelihood of customers recommending a product or service to others.
Customer experience professionals can use NPS as an NSM to focus on delivering exceptional experiences that drive customer advocacy and referrals.
Customer Effort Score (CES)
CES assesses the ease of a customer’s interaction with a company’s products, services, or support.
By adopting CES as a North Star Metric, professionals can streamline processes and reduce customer effort, resulting in improved satisfaction and loyalty.
Customer Lifetime Value (CLV or CLTV)
CLTV measures the total value a customer generates throughout their relationship with a company.
By making CLTV the NSM, professionals can prioritise strategies that foster long-term customer engagement, retention, and maximise the lifetime value of each customer.
North Star Metrics are invaluable tools for CX professionals (or any business owner), enabling them to drive customer-centric strategies, foster alignment, and create long-term value.
By selecting the right North Star Metric and leveraging its benefits, businesses can enhance the customer experience, build customer loyalty, and drive business growth.
With clear direction provided by NSMs, customer experience professionals can chart a course towards exceptional customer satisfaction and establish their organisations as leaders in delivering outstanding experiences, which, as we know, delivers positive results to a business’s bottom line.