identifying your north star metric & building a model to predict growth

Identifying your North Star Metric & Using a Growth Model to move it

Presented by:

Sean Ellis@SeanEllisCEO & FounderGrowthHackers

Chris More@ChrisMoreHead of Growth for FirefoxMozilla

Identifying yourNorth Star Metric (NSM)

North Star MetricOverview

1. What is it?

2. Examples

3. Case study on

business impact

4. Benefits

Most important concept in growthNorth Star Metric

- Focal point of fastest growing businesses - Opposite of a vanity metric- All important metrics key off of the NSM

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

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

Examples of Poor North Star Metrics

- Registrationsno value delivered

- Repeat usage ratenew users not considered

- Average purchase sizenew not considered

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

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

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

NSM is a full company metricNot 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

Using a Growth Model to move the North Star Metric

Growth Model Overview

1. What is it?

2. Benefits

3. Using a model

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

Example DAU growth model of baseline user base

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

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

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

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

Example “what if” referral loop went viral D30+

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

1. Determine what is “acquisition” for your product2. Input real acquisition and retention cohorts over time3. Perform calculations from launch to far future4. 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

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

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

- 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

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