What it is and what problem it solves
Six months into a plan, the conversation is usually the same. Sales are up, but it isn't clear whether that is the plan, the season or a competitor that ran out of stock. And the starting point itself often gets rewritten: “we were already growing, really.”
The baseline ends that argument before it starts. It records the North Star metric and its supporting indicators, each with its definition, its source, the person who owns the data and the starting value at a cutoff date. Leadership signs it, and from that moment every result is read against it.
It protects both sides. The client judges its vendors, and itself, against an agreed yardstick. And whoever directs the plan answers for a result against baseline, not for an impression. That is why we talk about signed measurement: we don't promise a number, we agree on how it will be measured.
When to use it and when not to
It is built at the close of Diagnostic and Strategy, before the Playbook. Also when a company changes agencies, reorganizes its sales team or starts a new leadership era: any moment when someone is about to take credit for a change.
Two cases call for care. If the data doesn't exist, the baseline isn't invented: the first action sheet is to build the measurement, and that indicator's baseline stays provisional with a date to consolidate it. And if the market is new to the company, the starting point is zero sales, so what gets signed are the market and sales activity indicators that will be tracked.
How it is built
- Choose the North Star metric. The one that best reflects the value the target customer receives and that predicts revenue. Deliverable: North Star metric with a written definition.
- Supporting indicators. Three to five, mixing leading indicators, which warn early, and lagging ones, which confirm. Deliverable: indicator tree.
- Operational definition. Formula, what counts and what doesn't, unit and period. Deliverable: indicator dictionary.
- Source and data owner. ERP, CRM, distributor sell-out reports or manual records, each with a person who answers for it. Deliverable: source sheet per indicator.
- Measure the starting point. With a reference period that neutralizes seasonality; often, the same period the year before. Deliverable: starting values with a cutoff date.
- Context note. What is already known to affect the data: a planned price increase, a change of distributor, a competitor entering. Deliverable: note signed alongside the baseline.
- Sign-off. The CEO or general manager signs the whole, and each data owner signs their line. Any later change goes through the committee, with minutes. Deliverable: versioned, signed baseline.
Anatomy of the deliverable
The baseline fits in one table. The examples in the template are hypothetical and suit a company that sells through distributors and directly to key accounts.
| Indicator | Type | Definition | Source | Data owner | Reference period | Starting value |
|---|---|---|---|---|---|---|
| Points of sale reordering the priority line | North Star metric | Points that placed a repeat order in the period | Distributor orders | Trade marketing manager | Same period last year | Measured value |
| Average net price | Supporting, lagging | Revenue divided by units, after discounts | ERP | Finance | Last twelve months | Measured value |
| Target-tier proposals | Supporting, leading | Target-tier proposals as a share of all proposals issued | CRM | Sales leadership | Last quarter | Measured value |
| Sales cycle | Supporting, leading | Days from first meeting to signature | CRM | Sales leadership | Deals closed in the last year | Measured value |
| Lost customers | Supporting, lagging | Customers with no purchase in the period who did buy in the previous one | ERP | Sales administration | Same period last year | Measured value |
Below it go the cutoff date, the version, the context note and the signatures with name, title and date. Being signed means something specific: nobody can change a starting value without leaving a trace.
The classic framework: the North Star metric
The North Star metric was born in digital product and growth teams; Sean Ellis is among those who did most to spread it. The idea is to pick a single metric that captures the value the customer receives and predicts long-term revenue, so every team pushes in the same direction.
The principle works for us. It has three limits for the companies we work with.
It was built for products with usage data
An app knows what every user does. A manufacturer that sells to wholesalers, who in turn sell to colmados, the neighborhood corner stores, can't see end use. The North Star metric has to be chosen from what can actually be measured, not from the ideal.
A single metric can be gamed
Volume goes up if you give margin away. That is why the North Star metric always sits next to a price or margin indicator.
It says where to go, not where you start
The framework focuses on the destination and barely mentions the starting point, which is exactly where the arguments begin. That is our contribution: the North Star metric with a starting point agreed in advance and signed.
Common mistakes
- Measuring what is easy to pull. The baseline is prepared by whoever has system access, not by whoever decides. What comes out is the data that is available, not the data that matters.
- Picking an atypical period. In a hurry, the team measures last month, which may be Christmas, tourist season or August. The comparison is skewed from day one.
- Definitions that shift along the way. A new ERP or a new data owner changes the formula without warning. The indicator dictionary exists to prevent that.
- Measuring only sell-in. When you sell through distributors, what you invoice the distributor doesn't tell you whether the product moves off the shelf. Without some sell-out data, the baseline measures inventory, not demand.
An illustrative scenario
Take a hypothetical food distributor in the Cibao with three product lines. It sells to colmados through wholesalers and directly to supermarkets.
The North Star metric chosen is the number of points of sale that reorder the priority line. In supermarkets the data exists. In the traditional trade it doesn't: wholesalers don't share their orders. The baseline is signed with that indicator marked provisional, and the first action sheet is an agreement with two wholesalers to share order data, with a date to consolidate the starting value.
What doesn't happen is estimating the figure so the table looks complete. How this baseline is read afterward is explained in the period committee and in measurement and governance.