What is AARRR Framework?
Acquisition, Activation, Retention, Referral, and Revenue (AARRR) is an ideal framework for understanding your customers, their experience, and improving your funnel, as well as creating some valuable and practical metric targets for your firm.
AARRR Framework is an acronym for a set of five user behaviors that businesses can track throughout the customer lifecycle. It is used to improve product quality and marketing.
AARRR stands for:-
- Acquisition: How are the customers initially finding out about your product or service.
- Activation: What actions are the customers taking while dealing with your product.
- Retention: Are the customers sticking around? If not, how can you ensure they stay?
- Referral: Are the customers encouraging their relatives and acquaintances to use your product?
- Revenue: Are the customers willing to pay for the product or service? How can you boost the money coming in?
Who created the AARRR Framework?
The AARRR framework was first created by Dave McClure, a silicon valley investor and founder of 500 startups, as part of the Supernova talk he gave in 2007.
McClure had two goals in mind while creating the framework. First, let the companies know the metrics that mattered to their growth and only focus on them. Second, help the companies use the correct data to accelerate their product management and marketing success and improve the initiatives that aren’t performing so well.
You may have also heard the AARRR framework is referred to as “Pirate Metrics.” You can use product roadmap software to implement modifications to the product strategy based on the insights you obtain from the AARRR framework.
The reason? Hint – Try saying “AARRR” out loud. Maybe you’ll get your answer.
What are some examples of the AARRR Framework Metrics?
The AARRR framework, at its core, consists of five critical metric categories. Each metric corresponds to specific objectives required for a business to grow and sustain itself in the market. This framework, however, does not have clearly defined characteristics of each metric and can be changed based on the type of industry and requirements.
Let us consider some real-world examples for a better understanding of these metrics.
- SEO research
- Marketing campaigns
- Ads and other content campaigns
- Social media promotion
- Word of mouth
- Providing a contact form
- Experimenting with different features
- Signing up for a free trial
- Subscribing for a newsletter
- Visiting different pages
- Responding to your emails
- Revisiting your website/product
- Repurchasing your product.
- Recommending relatives and acquaintances by word of mouth
- Social media promotion of your brand
- Referral promotions embedded emails
- Signing up for referral programs
- Reaching a previously set minimum revenue for a customer
- Reaching break-even point
- Income exceeding the customer acquisition
These are just some examples you could use as part of the AARRR Framework for your business. They could change based on the type of business or industry you are in, i.e., there is nothing set in stone for the AARRR framework.
Keeping track of these metrics would help you see many new opportunities in your business. This is one of the significant benefits of using this framework.
How to use the AARRR Framework?
According to McClure, the AARRR framework is less a step-by-step process and more about the definitions of the metrics you choose to inspect. Here’s how you could use this to cover every aspect of your business.
- Define the AARRR metrics most relevant to your organization.
- Set up the tools and processes needed to assess and track these metrics.
- After gathering some factual data, use the results to make some changes, set up A/B tests, and analyze the results to make decisions best suited to your business.
- You could now turn any analysis into action within your organization via this refined set of AARRR metrics.
How to create an AARRR funnel?
The Pirate Funnel is a methodology for breaking a company into sections and determining where you should spend your efforts. Dave McClure created the Pirate Funnel because the initial letters spell out AAARRR. It stands for Awareness, Acquisition, Activation, Retention, Referral, and Revenue.
If you’re unsure where to begin, the pirate metrics are an excellent place to start. You can see where you lose the most people if you fill in all of the AARRR stages in a Pirate Funnel Canvas.
The Pirate Funnel’s six metrics are:
The acquisition is the initial step in your funnel.
During the acquisition phase, you should ask yourself, “How can I get potential clients to find me?” during the acquisition phase.
During the Activation stage, you should think, “How can I give my potential clients a pleasant enough experience?”
“How can I get potential clients returning to me?” you should be asking at the Retention phase.
“How can I encourage potential clients to talk about me in their circles?” you should be considering during the Referral stage.
The AARRR framework’s ultimate level. Throughout the Revenue stage, you should be thinking, “How can I convert potential clients to paying users?”
AARRR stands for Acquisition, Activation, Retention, Referral, and Revenue. It refers to a set of metrics that can be used to enhance the company’s growth.
AARRR, when said out loud, sounds like a famous pirate exclamation and hence is called Pirate Metrics.
The metric “components” Awareness, Acquisition, Activation, Revenue, Retention, Referral — or AAARRR for short — make up pirate metrics, which is essentially a technique of grouping multiple metrics and KPIs. It’s the foundation for understanding your consumers’ experience, refining your funnel, and establishing some valuable and actionable metric targets for your business.