Creating a metrics hierarchy

A well-structured metrics hierarchy connects high-level business goals to daily team activities. At the top sits your North Star Metric, defining overall success. The middle layer contains KPIs that monitor critical business functions. The foundation consists of team-specific input metrics that directly influence higher-level outcomes. In OKRs, you can set higher-level input metrics as your objectives. Then use more specific or lower-level input metrics as your key results. That way, the work your team does connects directly to bigger outcomes.

This hierarchical approach makes cause-and-effect relationships clear. For example, a product team might track feature adoption (input metric), which influences user engagement (KPI), which ultimately impacts monthly active users (North Star Metric). Visualizing these connections helps everyone understand how their daily work contributes to company success, improving decision-making at all levels.

Building an effective metrics hierarchy requires collaboration across teams. Product, marketing, engineering, and customer success must agree on how their respective metrics influence each other.