First, I’ll give a quick intro to my background. Before I launched PadFinders, Padlist and BLVD, I had to find a clever way to make extra cash while at college. I come from an SEO background that started during the days when you could simply write x amount of keywords, x amount of times, to rank highest on Google’s search results. Needless to say, a lot has changed since then and you now have to apply SEO strategies to more than one search engine. It’s an interesting puzzle that includes Facebook, Instagram, local SEO, Bing, and Reddit, among others. However, it was when I started testing Google Adwords and viral concepts on Facebook that I really learned how to do online marketing.
In the past, you could essentially post or run an AdWords campaign and resell clicks to affiliates for a small margin in a large volume. This might be considered growth hacking in today’s world, but for me it was just an effective way to pay for rent and generate some income. I now find myself applying similar ideas to creating a North Star metric — analyzing all of the pieces of the growth puzzle and finding the best way to increase retention rates by honing in on a singular goal, the North Star.
Find Your Retention Rate
The number one driver for growth is discovering your retention rate and creating strategies to efficiently increase this percentage. Acquiring new customers is often a goal of many companies, but what’s more important is retaining the customers you already have, keeping them engaged and making them repeat buyers. Once you know your retention rate, you can prepare for growth.
The first step for any startup is confirming product-market-fit. Don’t focus on hiring a growth team, researching “growth hacking,” or begging friends to share your revolutionary idea to their network. The number one reason that startups fail is that they don’t confirm product-market-fit prior to focusing on growth. If you try to grow a startup, but there’s no interest in the product, you’ll fail every time. Startups with product-market-fit should then prioritize growth and get everyone, from the CEO and co-founders to team members and staff, on board in order to be successful. Someone will need to take the lead on setting the North Star, and in my opinion, whoever sets the North Star should remain the leader of the team.
Picking a North Star Focus
A common mistake companies make is focusing on “vanity metrics” numbers that may seem impressive, but actually do very little to express meaningful information. Examples of vanity metrics include registered users and page views instead of active users and engagement. A fantastic example of a sound North Star is Jan Koum of Whatsapp and his decision to focus on “send numbers” instead of registered users. AirBnB made the wise decision to focus on how many nights were booked as their overall growth metric. For an Ecommerce site, focusing on the number of items sold may be the appropriate North Star. Each company will have its own North Star and it should be clearly defined before scaling begins.
Why You Need a North Star Before You Grow
As a team size increases, CEO’s or Co-Founders tend to have less control and may lose some of their ability to influence their team. This is why having a common goal, a clear North Star, is so important for the entire company. The North Star will help define your office culture and create a cohesive team focused on the same outcome. If your North Star is well defined, the team will always be working towards that (same) one thing regardless of which department they’re a member of. This could be selling a particular product x times, registering x amount of users, achieving x amount of revenue, etc.
The magic moment for any startup is when the wheels start cranking and the North Star starts to get a bit closer. When all staff members are focused and working towards this common goal, in a market ready for the product/service, the magic starts. As growth gains momentum, other variables will inevitably come into play and require attention and manpower, but as long as the overarching goal of the North Star guides decision making, the way forward will remain clear.
Remember that your North Star is your guide, it is the beacon that drives your organization forward and informs all decisions made regarding growth. Focus on the value your product/service creates for your customers and avoid vanity metrics that neglect real interaction and engagement.