Every great team has a goal. In business, that goal is often tracked using metrics. But with so many numbers flying around, how do you know what truly matters? That’s where metric hierarchies come in. They help teams stay focused and move together in the right direction.
Let’s break this down using a simple concept, from top to bottom. Imagine a pyramid of metrics. At the top, you have the big picture — the purpose. At the bottom, you have the small actions that build momentum every day.
What’s a Metric Hierarchy?
A metric hierarchy is like a map for your data. It connects the most important company goals with the small, everyday actions that move them.
Here’s what it looks like, from top to bottom:
- North Star Metric
- Key Result Metrics
- Driver Metrics
- Daily Leading Indicators
Let’s explore each layer of this powerful framework!
The North Star Metric: Your True Guide
The North Star is your team’s ultimate guiding light. It reflects the core value your product delivers to customers. It’s not a vanity metric. It’s not revenue or total users. It’s the one number that best captures the value customers get from you over time.
Some classic examples:
- Spotify: Time spent listening to music
- Airbnb: Nights booked
- Slack: Messages sent by active teams
Why focus the whole team on one star? Because it unifies everyone — product, sales, marketing — under a single vision.
Key Result Metrics: Measuring Milestones
These sit right under the North Star. Think of them as smaller victories that help you move toward the big goal. They are often tied to your quarterly or annual objectives.
Let’s say your North Star is “Nights Booked.” A Key Result metric might be “Increase hosts in major cities” or “Improve guest review ratings.”
Key Results help teams focus on the strategic steps that lead to long-term success.
Tips to pick good Key Results:
- Make them measurable
- Set clear time frames
- Keep them aligned with the North Star
Driver Metrics: What Moves the Needle?
Now we’re getting more specific. Driver metrics are the levers you can pull to influence Key Results. They are things you can improve right now to start making progress.
For example, if your Key Result is “More active hosts,” some Driver metrics could be:
- Number of host signups this week
- Time to complete profile setup
- Host response rate to messages
Why they matter: This is where most of the day-to-day work happens. Product teams run experiments. Marketing launches campaigns. And the company starts seeing the gears turn.
Daily Leading Indicators: Your Early Signals
This is the base of the metric pyramid. These indicators give you a daily pulse of what’s going well — or not.
They move first. You launch a feature, and boom! These numbers shift long before higher-level outcomes change. Think of them as heartbeat data.
Examples:
- Daily active users logging in
- Click-through rate on the homepage
- New signups today
These are the canaries in the coal mine. They help you react fast, adjust course, and learn whether you’re on the right path.
Bringing It All Together: A Quick Example
Imagine you’re working on a fitness app. Here’s how your metric hierarchy might look:
- North Star Metric: Weekly active workouts logged by users
- Key Results:
- Increase user retention after 1 month
- Improve average workouts per user
- Driver Metrics:
- App onboarding completion rate
- Users joining workout challenges
- Daily Leading Indicators:
- New users that logged a workout today
- Challenge signups today
See the flow? Daily actions affect drivers, which improve Key Results, which fuel your North Star. Everything connects!
Why Metric Hierarchies Work
This setup does three magical things:
- Keeps teams focused on what matters most
- Creates alignment from leadership to interns
- Increases speed by revealing what to improve right now
When everyone knows how their work impacts the top, they feel more motivated. They don’t just complete tasks — they contribute to a mission.
Pitfalls to Watch Out For
Even a good system has traps. Here are a few:
- Too many metrics: Don’t try tracking everything. Focus!
- Vanity metrics: These look good on a slide but don’t mean much. Avoid them.
- Disconnected data: If your daily metrics don’t ladder up, the system won’t work.
Keep the hierarchy clean and connected.
How to Start Your Metric Hierarchy
Here’s a simple way to build your own:
- Pick your North Star (ask: what value do we deliver?)
- Select 2–4 supporting Key Results for your current goal
- Identify Driver metrics that your team can influence
- Decide on 3–5 Daily Indicators to monitor
Use dashboards to track everything. Keep weekly reports simple and use colors or visuals to show what’s working. Most importantly, review and adjust often. Metrics evolve as your product does.
Final Thoughts
Think of metric hierarchies as your team’s GPS. The North Star gives direction, the Key Results mark key turns, the Drivers keep the wheels turning, and the Day-to-Day indicators tell you if you’re still on the road.
Start simple. Stay flexible. Focus on what truly matters.
When your whole company speaks the same language of metrics, magic happens!
