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Growth funnels: Part 2 - Pirate Metrics "AARRR"

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What are AARRR Pirate Metrics?

The AARRR Pirate Metrics framework is an abbreviation representing five essential user-behaviour metrics that businesses should monitor: acquisition, activation, retention, referral, and revenue.

The basic concept is based on 5 types of measurements of user behavior:

  • A: Acquisition - where / what channels do users come from?
  • A: Activation - what % have a "happy" initial experience?
  • R: Retention - do they come back & re-visit over time?
  • R: Referral - do they like it enough to tell their friends?
  • R: Revenue - can you monetize any of this behavior?

AARRR was the backbone of Silicon Valleys greatest start-ups.

Original post by Dave - https://500hats.typepad.com/500blogs/2007/06/internet-market.html

Dave McClure, a Silicon Valley investor and the founder of 500 Startups, created the AARRR framework. 

McClure observed that numerous startup companies were getting sidetracked by superficial metrics, such as social media likes.

McClure had a dual objective with AARRR. First, he aimed to demonstrate to young companies how to concentrate on metrics that directly impact their business health. Second, he sought to help these companies utilize the appropriate data to evaluate the effectiveness of their marketing strategies, and then enhance those initiatives that were underperforming.

Below is a condensed version of McClure's own example AARRR metrics chart.


How Does the AARRR Pirate Metrics Framework Work?

Identify your AARRR Pirate Metrics.

Acquisition Metrics:

How do potential customers first hear or see about us? 

  • SEO
  • Social media
  • Marketing campaigns
  • Apps and widgets
  • Advertising

Activation Metrics:

How do potential customers get to try our product or first enter our ecosystem?

  • Exploring more pages
  • Trying out additional features
  • Spending a specific amount of time on your site or app
  • Subscribing to your newsletter
  • Registering for your free trial

Retention Metrics:

How many potential customers will stick around?

  • Repeatedly engaging with your product within a specified timeframe
  • Revisiting your website
  • Opening your company's emails
  • Subscribing to your RSS feed

Referral Metrics:

Will those customers invite other potential customers?

This aspect involves users recommending your company or product to friends and colleagues. Tracking referral metrics can be challenging since people use various methods to spread the word about apps and businesses. However, you can establish tools and campaigns to monitor referrals, such as:

  • Emails containing referral promotions
  • Referral contests
  • Marketing campaigns designed for easy product sharing

Revenue Metrics:

How many will actually become customers?

Lastly, it's crucial to establish actual revenue targets for your users. This will help you determine if your expenses for acquisition, activation, and other efforts result in profitable growth. You'll want to know how to categorize users generating:

  • Minimum revenue
  • Break-even revenue
  • Revenue surpassing the customer acquisition cost

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