Product AnalyticsvsNorth Star Metric

Product analytics is the practice of measuring HOW users interact with your product to make better decisions. The core metric is DAU/MAU ratio (Daily Active Users ÷ Monthly Active Users), which measures 'stickiness' — how often users return. A 50%+ DAU/MAU means users open your product 15+ days per month (Facebook-like engagement). Most B2B SaaS lives at 15-25% DAU/MAU. Product analytics turns guesses into data: instead of 'users like feature X,' you know '34% of users use feature X, and those users have 60% lower churn.'

Your North Star Metric is the single number that best captures the core value your product delivers to customers. Airbnb's is 'Nights Booked.' Spotify's is 'Time Spent Listening.' When this metric goes up, everything else follows — revenue, retention, referrals. It aligns the entire company around one measurable goal.

The vanity metrics trap kills product teams. Tracking total signups, page views, or 'registered users' tells you nothing about product health. Twitter had 1B+ registered accounts but only 330M MAU — 67% of accounts were dead. Another trap: measuring too many metrics. Teams that track 50+ metrics end up acting on none. The best product teams track 3-5 core metrics obsessively. Amplitude's data shows teams with fewer than 10 tracked events make decisions 3x faster than teams tracking 100+.

The biggest mistake is choosing a vanity metric as your North Star. 'Total Users' sounds impressive but ignores whether those users are active or getting value. Zynga had hundreds of millions of registered users but collapsed because their North Star should have been 'Daily Active Players,' not sign-ups.

Set up a core event taxonomy with 5-8 key events that define your product's value delivery. For a SaaS tool: signup → activation (first 'aha' moment) → completed core action → returned within 7 days → invited team member → upgraded to paid. Track activation rate (% of signups who reach the 'aha' moment within 7 days) — this single metric predicts long-term retention better than any other. Target 40%+ activation rate.

Pick a metric that reflects VALUE DELIVERY, not revenue directly. Test it with this framework: (1) Does it measure the value users get? (2) Does it predict long-term revenue? (3) Can every team influence it? If yes to all three, you have your North Star. Rally the entire team around this single metric.