North star metric, OKRs and KPIs: not just for SaaS

A north star metric is the one number that tells a business whether its customers got value from it, and that moves before revenue does. KPIs are the three to five inputs that push it. OKRs are the quarter's dated bets on moving one of those inputs by a stated amount. Together they link the week's work to the year's revenue.

The words came from software companies, and most guides still give SaaS examples: weekly active users, accounts that invite a teammate, minutes of content played. A creative brand that sells in drops, through a catalog, with a membership or by seasons needs the same chain. What changes is the number at the top, because each of those four ways of earning wins or loses its revenue at a different moment.

A north star metric is the single number that shows customers are getting value and moves before revenue. KPIs are the three to five inputs a team can push to move it; OKRs set a dated, measurable target on one input for the quarter. The chain works in ecommerce: the top number depends on how the brand earns.

Key takeaways

• A north star metric is the one number that shows customers got value and moves before revenue; KPIs are the three to five inputs that move it.
• OKR vs KPI: a KPI is a gauge read every week, and a good key result is a KPI with a target and a date.
• The chain is not just for SaaS: drops, catalogs, memberships and seasons each need a different number at the top.
• The test of a north star is whether one point of it can be written in euros; if it cannot, it is a KPI at best.
• On the worked store, one point of customers who order again is €1,275 a year, and an OKR that lifts it two points is worth €1,148 of margin.

What a north star metric is, and what it is not

Amplitude calls it "the key measure of success for your company's product team," and adds the part that matters most: "It defines the relationship between the customer problems your product team is trying to solve and the revenue you aim to generate by doing so." A good one has three traits in Amplitude's guide. It springs from "the actions within your product that provide realized value to your customer." It is "a leading indicator of future success." And someone should be able to read it and understand the strategy behind it.

That rules out three common candidates:

• Revenue itself. Revenue is the result the north star is supposed to predict. By the time it moves, the quarter is over.
• An activity count. Sessions, followers or logins can climb in a week when nobody bought anything. A number that rises on its own orients the team wrongly, and does it with authority.
• A goal. A north star has no deadline. It is a standing gauge, read every week for as long as the business earns the same way.

The idea was never only for software. Amplitude's own guide describes a Fortune 100 retailer growing its mobile business whose north star is "number of mobile orders delivered."

North star metric, KPIs and OKRs: one chain

The three terms are not competing frameworks. Each one sits on a different link.

North star  ← moved by →  KPIs (3 to 5 inputs)  ← moved by →  OKRs (one quarter, dated)

KPIs are the inputs. Amplitude defines inputs as "a set of three to five influential, complementary factors that you believe most directly affect your North Star Metric and that your team can directly influence." In practice, one KPI per moment that carries the brand's revenue.

OKRs are the bets. According to What Matters, John Doerr's site, the method was created by Andy Grove at Intel and brought by Doerr to Google's founders in 1999. An objective is "what is to be achieved, no more and no less." Key results are "specific, time-bound, and aggressive yet realistic," usually three to five under each objective.

OKR vs KPI: the same number, two jobs

A KPI is a gauge: it is read every week, and it stays as long as it explains the north star. An OKR is a commitment to move a gauge by a date. The most useful key result is a KPI with a target and a deadline attached.

Two tests keep the chain honest:

• A KPI that no OKR ever touches is a report. It describes the business and changes nothing.
• An OKR whose key results are not KPIs is a to-do list. "Launch a loyalty program" is a task. "Second orders within 90 days up by two points by the end of March" is a key result.

The reverse mistake also happens: turning the north star into a quarterly target. The team then moves the number instead of the value it represents.

A north star metric for each way a creative brand earns

In growth marketing for creative businesses, growth runs through five moments: Appear, Attend, Recognize, Retain and Know. The revenue mechanism decides which of them carry the money, and the north star should sit on those.

How the brand earns	Moments that carry it	North star candidate	KPIs under it
Drops	Appear and Recognize	Buyers per drop who bought an earlier one	Waitlist sign-ups before the drop, waitlist buyers in the first 48 hours, returning buyers per drop
Catalog	Attend and Retain	Customers who order again within the year	Product page conversion, days to the second order, second orders within 90 days
Membership	Retain and Know	Members still paying after their third month	Second-month renewals, members who use the benefit each month, cancellation reasons read
Seasons	Recognize and Retain	Last season's buyers who buy again this season	List reactivation before launch, first-week orders from returning buyers

A drop brand that watches followers is reading Appear and missing Recognize, the moment when the second drop sells to people who already know the brand. A catalog brand that watches sessions is buying traffic for a store that may be losing its customers after the first order.

Where SaaS got it right, and where it slips

Software teams were right to put an action inside the product at the top: that is why product-led growth starts there. The inputs are often habit measures, such as the DAU/MAU ratio.

The slip is the same one a brand can make. Weekly active users rise with a free tier or a reactivation email while revenue stays flat. A satisfaction score like NPS for SaaS moves a few points and nobody can say what a point is worth. The fix in both worlds is to tie each candidate to who stays: the customer retention rate of the accounts behind it, and, on the roadmap, feature prioritization that prices each request in the retention of the customers asking for it. The test below applies there too: on the product used across this blog's SaaS posts, 1,100 customers at €60 a month, one point of monthly churn is 11 accounts, or €7,920 of ARR.

The test: does one point of the north star metric move revenue?

If nobody can write what one point of the number is worth in euros, it is a KPI at best. Here is the test on the worked store of this blog, a catalog brand: 300,000 sessions a year, a €68 average order, 1 order for every 100 sessions, so 3,000 orders and €204,000 of revenue. Those orders come from 1,875 customers, and the store keeps €0.45 of every euro as gross margin.

Its north star is customers who order again within the year. Today 750 of the 1,875 do, 40 of every 100, the repeat purchase rate worked out on the same store.

Value of one point = customers × 1/100 × average order
                   = 1,875 × 0.01 × €68 = €1,275 a year

The chain for the next quarter:

• North star: customers who order again within the year, today 40 of every 100.
• KPIs: second orders within 90 days of the first; first orders that need no contact with support; returning visitors who reach a product page.
• OKR: Objective: first-time buyers come back for the next collection. Key result: second orders within 90 days up enough to lift the north star two points by the end of the quarter.

Two points are worth 2 × €1,275 = €2,550 of revenue a year, and €2,550 × 0.45 = €1,148 of gross margin. That margin is the ceiling: the quarter's work behind the OKR can cost up to €1,148 and still pay back within the year. Moving the same base four points, the case worked in ecommerce customer experience, is worth €2,295 of margin.

The number to take to your own brand

1. Name the revenue mechanism (drops, catalog, membership or seasons) and the two moments that carry it.
2. Write a candidate north star on those moments and price one point: customers × 1/100 × average order.
3. Hang three to five KPIs under it, one per moment, and write one OKR a quarter that moves one KPI by a date.

What to do this week: take the number your team looked at most last month and try to write what one point of it is worth in euros. If you cannot, it is not your north star. Write the candidate from the table above for your revenue mechanism, price one point of it, and put the figure on the first slide of the next planning meeting.

Work through this with your own numbers

I run a creative brand that earns through [drops / a catalog / a membership / seasons]. Last year I had [number] customers, [number] orders and an average order of [amount]; my gross margin is [cents per euro]. The number my team watches most today is [metric]. Tell me whether that number can be my north star metric: calculate what one point of it is worth in revenue and margin, or explain why it cannot be priced. Then propose a north star that fits my revenue mechanism, three to five KPIs under it (one per moment that carries my revenue) and one OKR for next quarter with an objective and two key results, each with a number and a date.

FAQ

What is a north star metric?

A north star metric is the single number that shows customers are getting value from a business and that moves before revenue does. It has no deadline: it is read every week for as long as the business earns the same way. Amplitude describes it as the link between the customer problems a team solves and the revenue it aims to generate.

What is the difference between a north star metric and a KPI?

There is one north star and three to five KPIs under it. The KPIs are the inputs a team can push directly, usually one per moment that carries the revenue; the north star is the result they add up to. If a KPI moves and the north star does not, the KPI is measuring the wrong thing.

OKR vs KPI: what is the difference?

A KPI is a gauge read every week. An OKR is a quarterly commitment: an objective that says what is to be achieved and key results that are specific and time-bound. The most useful key result is a KPI with a target and a date. A KPI no OKR touches is a report; an OKR without KPIs is a to-do list.

What is a good north star metric for an ecommerce brand?

It depends on how the brand earns. A catalog brand can use customers who order again within the year; a drop brand, buyers per drop who bought an earlier one; a membership, members still paying after their third month; a seasonal brand, last season's buyers who buy again. The test is whether one point of it can be written in euros.

How often should a north star metric change?

Rarely: only when the way the business earns changes, such as moving from drops to a membership. KPIs can change when one stops explaining the north star, and OKRs change every quarter by design.

Finding the number at the top of your brand's chain, and pricing one point of it on your own orders, is part of what The Conversion Audit maps. Five business days, $500, and the map stays with you whether or not you hire anyone next.