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Founding a startup can feel like searching for buried treasure. The high risks and high rewards can quickly get bogged down in the slog of searching without a clue for the thing that makes your company a unicorn.
Enter AARRR, a map that can guide you through the treacherous seas of starting a business. With a focus on crafting the perfect customer journey, this framework helps you and your team mark growth with an X.
What is AARRR?
The AARRR framework, also known as pirate metrics, is all about optimization. It’s a way that businesses can conceptualize the customer journey and push it forward.
Using this method allows you to
- Focus on Key Metrics - By identifying the metrics that actually matter at each stage of your growth strategy, you can make better, faster decisions
- Understand Customer Behavior - With a clear, digestible customer journey you can see how customers engage with your startup and target your marketing efforts accordingly
- Boost Conversion Rates - By zeroing in on each stage of AARRR individually, you can optimize your process and get more people moving through the funnel
- Easily Scale - Pirate metrics are designed for exponential growth, meaning they can scale with your business
In the sink-or-swim world of startups, this kind of focused framework can give your crew the upper hand.
Why Pirate Metrics are Perfect For Startups
When a business is just beginning, every decision counts. You start out small enough that one bad storm could leave you shipwrecked. The AARRR framework helps startups focus on the things that matter and grow both quickly and sustainably.
This is made obvious in the three major pillars of pirate metrics.
- Data-Driven Decisions - AARRR offers a structured way to track and analyze your team’s key metrics at every stage of the customer journey
- Rapid Experimentation - Quickly iterate on strategies as you go with a structure made for agile processing
- Customer Centricity - With the customer journey acting as the backbone of your strategy, every decision will be seen in context of their experience
These values help your startup stand out and stay the course.
Understanding the Stages of AARRR
The core of AARRR is about breaking down the customer journey into stages. This gives you and your team the space to finesse each step of the process on its own.
As you build out your funnel, take time to imagine how it feels to be the customer. What draws you in? What might be overwhelming or difficult to understand? You can always ask for feedback, engaging with your customers head-on and showing them that you value what they value.
Pay special attention to the metrics for each phase, as they will be how you track the success of each individual stage. Rather than looking at a huge list of KPIs together, pirate metrics allow you to engage with data one stage at a time.
Stage One: Acquisition
The first step on this pirate-centric journey into growth is acquisition. This stage is all about attracting new users to your brand. Think of it as finding new crew members to join your pirate ship.
Just as a seasoned captain would seek out the ideal candidates and know exactly how to get them on board, you need to understand your target audience. Find out what makes them tick, and how your brand can solve their problems.
Once you know what people want, you can connect them with your company through search engine optimization, social media advertising, content marketing, email marketing, or influencer partnerships.
Keep an eye on the horizon by tracking crucial KPIs such as
- Website Traffic
- Conversion Rate
- Cost Per Lead
- Click-Through Rate
This is one of the most important stages of AARRR because it sets you up for success later on. The more new people you introduce your brand to, the easier it will be to start a viral loop, make sales, and bring in tons of sweet revenue treasure.
Stage Two: Activation
Now that you’ve spotted potential crew mates and gotten them invested in your ship, it’s time to get them sailing. Activation is all about taking curious new leads and turning them into engaged and active customers.
First impressions are everything in this stage. If someone has a positive experience with your company from the start, they’re far more likely to convert now and stay loyal in the future.
Some great ways to engage your customers from the start include
- Clear Onboarding - A simple, easy-to-follow onboarding process for new users will get them invested faster
- Personalization - Something as easy as a personalized welcome message or email can go a long way to a new customer feeling appreciated
- Being Available - Make sure you are responding to any questions or concerns new users have right away. Studies show that 50% of customers won’t spend money with a business that takes longer than expected to respond to messages
- Gamification - Offer incentives or rewards for completing tasks like signing up, making a purchase, or referring a friend. This will give users a warm and fuzzy feeling each time they engage with your brand
KPIs to help you track how well your crew is acclimating to life at sea include
- Engagement Rate
- Time Spent on Site/App
- Churn Rate
- Number of Active Users
Engaged customers stick around, meaning they are far more likely to continue down the AARRR pipeline.
Stage Three: Retention
Every pirate captain's worst nightmare is having their crew jump ship and join another. Retention is key to longevity, especially when you can use the loyalty of existing customers to bring in new ones.
Building up loyalty within your customer base can be done in tons of ways, including
- Loyalty Programs - Reward repeat business, referrals, and other positive interactions with your brand
- Consistent Updates and Upgrades - Listen to your customer base, updating your app or product, and giving them what they don’t know they need
- Customer Service Excellence - When every interaction with your company is a positive one, there’s no reason for users to look elsewhere
- Community Building - Create a connection with your audience through social media, newsletters, or in-person events to become an active part of their day-to-day lives
You can track the success of your efforts with
- Time Between Purchases
- Customer Satisfaction Score
- Customer Lifetime Value
- Average Order Value
Your ship can weather any storm with a loyal crew that won’t jump overboard. What’s more, when you bolster customer loyalty, the next stage of AARRR is far easier to accomplish.
Stage Four: Referral
Why search the seven seas for a constant stream of new customers when your pirate crew can do the work for you? The fourth stage of AARRR is all about closing the viral loop and getting your current customers talking about your brand.
You can exponentially grow your user base when people share your startup with their friends and family. To foster this behaviour, try
- Referral Programs - Use discounts, gifts, and other rewards to encourage referrals
- Share Buttons - If your brand can be shared with a single click, there’s little stopping folks from doing so
- Focus on the Love - By framing referrals as a way to spread the joy your brand brings customers rather than a way to get a prize, you can boost the quality and amount of referrals you receive
As you refine your referral process, you can track performance with KPIs like
- Referral Conversion Rate
- The K-Factor
- Referral Channel Effectiveness
- Average Value of Referral
When you understand and implement the referral stage properly, you can boost your numbers and increase customer loyalty overall. A crew that can take ownership of a ship is far more likely to sail it with gusto.
Stage Five: Revenue
Why be a pirate without finding treasure? The goal of all this planning and strategising is, of course, to make a profit. To fully upgrade your process and bring the AARRR framework to its completion, you need to optimize the way your startup makes money.
Rather than simply pricing your products and forgetting about them, consider
- Pricing Optimization - You can adjust your prices to appeal to different customer segments
- Upselling and Cross-Selling - Encourage your customers to purchase complimentary things, or test out other products you think they’ll like
- Subscription Services - With a monthly or yearly payment plan, you can bring in consistent revenue
Track your team’s progress with KPIs like
- Revenue Growth Rate
- Average Revenue per Customer
- Revenue by Market Segment
- Total Revenue
If everything goes according to plan, you’ll be reaping the rewards of your booming startup in no time.
The Bottom Line
AARRR is more than just a clever acronym, it’s a powerful tool for startup success. By breaking down the customer journey into manageable stages, you can track your growth and quickly make improvements when needed.
Forget about blindly digging for elusive treasure, gather a crew of loyal customers in style with pirate metrics.
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