Author

Chris Dunlop

Introduction

"One of the biggest lessons I had learned in my years at P&G was the power of simplicity and clarity. I found that clearer, simpler strategies have the best chance of winning, because they can be understood and internalised by the organisation"

• A.G. Lafley, former CEO of Procter & Gamble

What is a North Star Metric?

Before we delve into YouTube's specific case, let's clarify what we mean by a North Star metric:

• It's the single metric that best captures the core value your product delivers to customers.
• It aligns directly with your company's growth and long-term success.
• It guides product development, user experience decisions, and company strategy.

YouTube's North Star: Watch Time Minutes

In 2012, YouTube made a pivotal shift in its core metric. Previously, like many platforms, they focused on view count. However, they realized this metric didn't truly capture user engagement or satisfaction. Enter "watch time minutes."

Why Watch Time Minutes?

1. Engagement Focus: It measures how long users actually spend watching videos, not just clicking on them.
2. Quality Indicator: Longer watch times generally indicate more engaging, valuable content.
3. Advertiser Value: More watch time means more opportunities for ad placement and viewer engagement with ads.

The Impact

This shift had profound effects:

• Content Creation: Creators were incentivized to make more engaging, longer-form content.
• Algorithm Changes: YouTube's recommendation system prioritized videos likely to increase overall watch time.
• User Behavior: Viewers were guided towards content they were more likely to watch for longer periods.

The Transformative Power of a North Star Metric

YouTube's case illustrates how a well-chosen North Star metric can catalyze business transformation. Here's how you can apply these lessons:

1. Align with Core Value: Ensure your metric directly reflects the primary value you provide to users.

2. Drive Behavior: Choose a metric that encourages behaviors beneficial to both users and your business.

3. Simplify Decision Making: A clear North Star makes it easier to prioritize features and strategies.

4. Unite Teams: A single, overarching metric can align different departments towards a common goal.

5. Measure Progress: It provides a clear benchmark for tracking growth and success.

Finding Your North Star

To identify your North Star metric:

1. Understand Your Value Proposition: What core benefit does your product or service provide?

2. Analyze User Behavior: What actions do your most satisfied customers take?

3. Consider Long-Term Impact: Which metric, if improved, would most significantly boost your business in the long run?

4. Test and Iterate: Don't be afraid to adjust your metric as you learn more about your users and business.

Examples from Other Industries

The Challenge

Try to see if you can sum up your business in one clear metric. Then think to yourself, how might we go about improving this number?

A Free Resource

If you're unsure about how to identify the North Star metric for your business, try our tailored GPT prompt by clicking here.

To showcase the tool I entered the following into the link above.

Cub digital is a software consultancy where we do bespoke websites/Ai/data/enterprise development for other businesses

Here is what it came up with:

Brainstorm Potential Metrics:

• Number of completed projects with positive client feedback.
• Client retention rate (ongoing partnerships and maintenance contracts).
• Conversion rate improvements on client websites post-launch.
• Referral rate (how many clients come from recommendations).
• Total business growth driven by Cub Digital’s websites (measured by website traffic or revenue for clients).

Recommend a North Star Metric:

• Client Retention Rate.

This metric best captures the long-term value Cub Digital provides by indicating how satisfied clients are with their services and whether they return for future projects. A high retention rate suggests that the websites are not only functional and aesthetically pleasing but are driving meaningful business results for clients. By focusing on increasing retention, Cub Digital can ensure their offerings continue to meet and exceed client expectations, driving sustained growth.

If you use the tool and it helps you then please let me know. I would love to hear about it!