The aarrr framework
Definition of AARRR Framework
The AARRR framework is among the most widely used methods to measure growth and success in startups and SaaS businesses. David McClure, the founder of Practical Venture Capital, introduced it, and it’s also known as the Pirate Metrics or Pirate Framework. It divides your client’s life cycle into five phases, each with its own data set, starting with the initial point of contact and ending when a potential customer becomes a paying customer. This will offer you a clear picture of which sections of the client life cycle are doing well and where you could improve your conversion funnel.
When we talk about the AARRR framework, we’re talking about a collection of user behaviors that firms may measure across the customer lifetime to improve product marketing and optimize product management.
Described by Dave as a primary tool, the framework is intended to empower organizations by enabling them to construct a model of customer behavior, which can then be used to better marketing and development activities.
Importance of The AARRR Framework
Acquisition, activation, retention, referral, and revenue are the five user-behavior metrics that product-led growth organizations should be tracking, according to the AARRR Pirate Metrics framework.
How to use The AARRR Framework
Those five major measure categories are at the heart of this framework’s structure. Each one is intended to help a company focus on specific goals and milestones necessary to grow and scale sustainably. AARRR metrics, on the other hand, are not predetermined, as is the case with similar frameworks.
Here are some real-world examples of metrics to assist you in better grasping the types of measurements that fall into each of the categories:
● Pay-per-click (PPC) search
● Search engine optimization (SEO) / organic search
Content marketing is a type of marketing that uses written content to promote a product or service.
● The spread of information by word of mouth
● Social networking is becoming increasingly popular.
● Using a contact form and submitting it
● Requesting a return phone call
● Making a service or product purchase is a common occurrence.
Participating in an email newsletter subscriber retention
● Visits to your website or use of your product regularly
● Getting your emails opened and replying to them
● Purchasing your goods or service a second-time referral
● Participating in referral programs and registering for referral programs
● Providing recommendations to friends or colleagues through word of mouth
● Using social media sharing to promote your brand is a good idea.
● Obtaining a predetermined minimum revenue per customer
● Bringing a break-even point in terms of total revenue
● Customer acquisition costs that are higher than the cost of acquisition
Don’t forget that these are only a few metrics that you may track as part of your company’s implementation of the AARRR framework. As you begin to keep track of these indicators, you’ll likely see that more opportunities start to present themselves on their own – and this is part of the value that employing a framework such as this provides.
AARRR’s framework is less concerned with the steps involved and more with specific definitions, such as which of the following metrics you choose to track in your organization. However, to cover all of the bases, here’s how you would apply the framework in a corporate setting:
First and foremost, you would determine which AARRR metrics are the most important to you. After that, you’d build up the tools and processes that would allow you to keep track of these specific KPIs.
Once you have some complex numbers, you can use the information to make tweaks and set up A/B tests. This will help ensure that you’re optimizing for the best possible results — for example, if your acquisition rates are high. Still, your retention rates are low; you’re optimizing for the best possible results. What steps do you need to take to rectify the situation?
After developing a more specific set of AARRR metrics, you may begin to put analytics into action within your organization.