Decoding North Star Metrics for Zomato and Sharechat
Contents :
- The idea of the North Star metric and why you need it?
- Types of games in products
- Building out Northstar metric for Zomato and Sharechat :
The Idea of North Star Metric
How does a startup make sure they are moving in the right direction? If the decision they are taking is going to help achieve their long-term vision.
This is where the North Star Metric or Focus metric comes up in the world of Product. The fundamental idea of a North Star Metric is that it's a number that tells you if your product is moving in the right direction.
If we were to define North Star Metric?
The North Star Metric is a leading indicator of sustainable growth. It acts as connective tissue between the product and business and customer value
There are 3 main Components to a North Star Metric :
- It should measure Measure Customer Value
- It should with Align with Product Vision
- It should be a Leading Indicator of Revenue
Before we can go ahead and build out your North Star Metric, we need to understand what kind of product games you are playing
There are 3 main product games :
- Attention: The goal is these types of products to get the attention of users, e.g., Sharechat, Koo, Instagram, Tiktok
- Transactional: The goal of this type of product is to make you buy something or make you have a financial transition, e.g., Flipkart, Swiggy, Zomato, Amazon
- Productivity: These are productivity software, usually B2B SaaS (Software as a Service) Products eg . Slack, Salesforce, Zoho
Now that we have understood various Product Games let's look at a few examples of north star metrics for each of them
- Attention :
- Total time-spend engaging with content
- Number of User Spending > 5 mins /day
- Number of Stories viewed
- Numer of Subscribers streaming >60hrs / month
2. Transaction:
- Total Number of Purchases completed
- Average Number of Purchases per prime customer
- Number of Searches completed
3. Productivity:
- Total Number of records created
- Total Number of records created
- Total Active Users who logged In / Completed a task
Once you have figured out what your Northstar metric is, how to measure it? Northstar metric is often broken into more superficial metrics using the below formula :
f(star)= Breadth * Depth * Frequency * Efficiency
Breadth ⇒ How many active / Returning users are taking this action
Depth ⇒ What’s their depth of Engagement
Frequency ⇒ How often do each user Engage
Efficiency ⇒ How fast they succeed
Now that we have got a base idea on how to find Northstar metrics, I will be applying these to find Northstar metrics for a few Indian startups
North Star Metric for Zomato and Sharechat :
Zomato
Zomato is one of the leading Food Delivery platforms in India. Their technology platform connects customers, restaurant partners, and delivery partners, serving their multiple needs.
Core Bussiness Model: Zomato Makes money in a few ways, namely Order Commission, Advertising, and Membership Subscriptions.
Even though from the surface Zomato is Playing a Transaction game but only 7 % of its revenue is from Food Order Commissions but 72 % of its Revenue is from Restraunnt Advertisements so Zomato looks like its playing the Attention game but the core value of Zomato’s users is getting food delivered fast
Let’s assume the core users of Zomato are early professional between the ages of 20–30 who don’t have time to cook and need a quick way to get food daily at a certain time
To build the north star metric lets lay out the leading indicators :
Breadth: Number of users Placing a food order
Depth: Number of Items in the order
Frequency: How many times a user places an order a week
Efficiency: Percentage of Items Delivered on Time
So the NORTH STAR METRIC would be: Number of Successful food items deliver each week
Sharechat
ShareChat is a social networking and regional content platform. The Company enables its users to share videos, jokes, GIFs, audio songs, and funny images with each other
Core Bussiness Model: ShareChat does not charge its users to earn revenue. Instead, it generates revenue through advertisements, payment transactions, and sponsored campaigns.
It is clearly evident that ShareChat is playing the attention game
To build the north star metric lets lay out the leading indicators :
Breadth: Number of users engaging with content
Depth: what is the depth of engagement
Frequency: How many days does a user engage with an app in a row
So the NORTH STAR METRIC would be: Number of Users liking posts and sharing posts to WhatsApp every day
Note : All the north star metric mentioned above may not symbolize the actually North Star Metric(NSM) that the Startup is using . All the NSM decodes are based obervsations of publicly avalable data and Aplitude’s method of Finding a North Star Metric you can check them out here : Link
