Skip to main content

AARRR: What Is The Pirate Metric & How to Use It To Grow Your Business

 The AARRR Framework, affectionately known as the Pirate Metrics, is a growth model that startups and scale-ups use to analyze and optimize the user journey. The beauty of the framework lies in its ability to break down the user journey into manageable chunks so you can understand, improve and resolve each one to accelerate growth.


Let’s look at the stages of AARRR and how you can use this approach to grow your business.


Image by Freepik



The five stages of AARRR

Let’s take a quick look at the five stages of AARRR so you can quickly orient yourself with the concept.


Acquisition: User acquisition refers to how you help customers find your product or service.


Activation: User activation refers to users' first positive experience with your product or the set of actions they need to take to become an active user.


Retention: User retention is about what you can do to keep your users engaged.


Referral: Referrals happen when your users love your product so much that they recommend it to friends and family.


Revenue: Finally, revenue is about how your product brings in money via subscriptions, sales, up and cross-selling, and more.


AARRR: Why you might need it 

So, aside from its cool name, why might you need Pirate metrics? Let’s take a look.

#1. You’re not sure which metrics you should track

With so many different metrics to track, it’s easy to get overwhelmed. AARRR provides the structure that teams need to focus on the metrics that matter.

#2. You don’t understand the customer journey

AARRR helps teams take a longer-term view of their customer's relationship with their product.

#3. You don’t know why your revenues aren’t growing

Each stage of the AARRR framework helps you analyze your business from the perspective of revenue, as opposed to departments or other measures. Understanding these stages lets you more easily identify where friction occurs.

#4. You need help making data-driven decisions

The AARRR metrics give you the data points you need to make strategic growth decisions. In particular, it recommends metrics for each stage so you can quickly identify the bottlenecks or areas of friction that are costing you growth. 



How to engage each stage of the AARRR framework

The best thing about the AARRR framework is that it takes a big concept, like the user journey, and breaks it down into manageable growth metrics for you to measure and optimize.


User Acquisition

User acquisition is about bringing potential customers to your product or service. You can do it organically through content marketing, via paid ads, or, in some cases, with user referrals. Of course, getting users to come to your page is one thing, while converting them into regular or paid users is a different beast.


User acquisition growth metrics

Typical user acquisition metrics to track include:


  • Customer acquisition costs (CAC)

  • Site visits from SEO, social media, referrals

  • Paid ads: CPC, CPM, CTR

  • Sales demo conversion rate

How Usetiful can help

While Usetiful is not a dedicated marketing and advertising product, it helps optimize this stage of the funnel by ensuring a great user onboarding experience. 


Our onboarding tool will feed into reducing your customer acquisition costs (CAC) because driving an interested user to your product creates an opportunity for your onboarding to convert users.


However, perhaps more interestingly, Usetiful allows you to build interactive product demos. What better way to show your prospects what your product is capable of than a demo that they can use themselves? 


Of course, from a user acquisition perspective, these demos can also integrate with your CRM, which allows you to personalize each demo and collect valuable data for sales follow-up. Moreover, a product demo is a classic self-service option if your user acquisition strategy involves user referrals or focuses on product-led growth.



User Activation

User activation happens when users explore your product and see what it's made of. The idea here is that they are measuring it up to see if and how it can solve their pain points. A good user activation flow involves moving your users toward their aha moment, which is the precise point where they realize how your solution can address their problems.


User activation growth metrics

Some good user activation metrics here include:

  • User activation rate

  • Time to activation

  • Feature adoption rate

  • Checklist completion rate 

  • Onboarding completion rate

  • Time to Value (TTV)

How Usetiful can help

Usetiful is built to drive user activation. Some of the many ways it can help include:

  • Create product tours and walkthroughs that teach users how to get value from your product

  • Build onboarding checklists to help drive users toward their aha moment and set achievable user goals inside the product

  • Add tooltips to UI elements so users have contextual help to guide them around the product.


User Retention

User retention is an integral part of the AARRR framework. While the first two steps focused on user acquisition and user activation, this step is about holding on to the users you have. There is no point in spending time and effort acquiring users if your product is leaking customers due to poor onboarding of undiagnosed customer satisfaction problems. 


User retention growth metrics

Some user retention metrics you should track include:


  • Daily/monthly/weekly active users

  • User churn rate

  • Use retention rate

  • Customer lifetime value (CLTV)

  • Customer satisfaction score (CSAT)

  • Net Promoter Score (NPS)

  • Product adoption rate

  • Feature adoption rate

How Usetiful can help

Usetiful is also a powerful tool for slashing customer churn. There are several ways it can help, including:


  • In-app surveys to help you deliver CSAT and NPS 

  • A 24-7 Assistant to help answer your customer's questions round the clock

  • A Knowledge Base so users can continue learning and developing with your product when they need help

  • Banners that help announce new features and updates to boost product and feature adoption rates

  • Additional product tours that are built to promote new or underutilized features


Referral

The upside of product adoption is that you create users who are engaged with your product. As users get value from your product and it solves their pain points, they’ll share it with their family, friends, and broader network. 


In the section on user retention, we showed how you can use the Customer Satisfaction Score (CSAT) and Net Promoter Score (NPS) to understand how users see your product. You can also use this metric to see how likely it is that your current user base will recommend your product to their network.


Of course, if you run a referral program, there are a wealth of different metrics that you can track, including the k factor (aka viral coefficient), which measures the recruitment ability of each user. 


User referral growth metrics

  • Referral rate

  • Referral conversion rate

  • CSAT and NPS

  • Referral invitation click-through rate 

  • The k factor per user

How Usetiful can help

Usetiful helps with referrals in several ways, including:

  • Product demos as part of referrals

  • Banner announcements to announce in-app referral programs

  • The general success of your onboarding content will heavily influence a user's willingness to refer others to your product.


Revenue

When it comes to the crunch, the best measure of company growth and success is revenue. The Pirate Metrics are about getting all your ducks in a row and funneling everything toward revenue.


Revenue growth metrics

Here are a few relevant revenue growth metrics that you can track:

  • Average revenue per user (ARPU)

  • Expansion revenue (from upselling, cross-selling, and so on)

  • Customer lifetime value (CLTV)

How Usetiful can help

Usetiful contributes to revenue growth through several features:

  • Reducing user churn through excellent onboarding content

  • Forging solid relationships through customer success-focused features like the 24-7 Assistant and in-app Knowledge Base

  • In-app Banners to drive upsell through marketing campaigns and promotions 


Final thoughts

Perhaps the easiest way to think about the AARRR framework is as a series of questions that you need to ask to grow your business revenues. Let’s break down each of these questions.


Acquisition: How is our target audience becoming aware of our product or service?


Activation: Are prospects having a positive first experience with our product, and does that lead to them performing desired actions?


Retention: Once activated, do our customers keep on returning to our product or solution? 


Referral: Do users love our product to the point that they’ll recommend it to their network?


Revenue: Are we monetizing customer interest efficiently?


These questions are important if you want to drive growth. However, they also lack precision due to their subjectivity. Thankfully, Pirate Metrics exists so you can attach objective values to each question. 


Once you decide what metrics are essential for each stage, you can begin to devise strategies to improve the stages. There are several ways that you can go about this, but working on your weakness step first is advisable. 


Usetiful can help with each step of the AARRR metrics. Our user onboarding software allows you to build content on top of your product or service to help guide new users on how to extract maximum value from your product. Instead of getting lost at sea, if you adopt the Pirate Metrics, you can rule the high seas.


Start for free today.




Popular posts from this blog

Hotspots and their purpose in user onboarding

When done well, Hotspots can help with user onboarding by quickly highlighting features or functions.

Top alternatives to UserGuiding

The market for DAP-s is growing, and many people are just getting familiar with the advantages that Digital Adoption Platforms can bring to their platforms. Now is the best time to get acquainted with the DAP market and see your options.

Pet Media Group Saw a 161% Increase in User Activation and Feature Adoption With Usetiful Onboarding

  Pet Media Group is the world’s largest operator of online marketplaces within the pet sector. They are based in Stockholm, Sweden, but they operate six major dog or horse marketplaces across Europe, including the UK’s largest pet marketplace (and the world’s second-largest), Pets4Homes. Other notable pet marketplaces they run are Sweden’s H√§stnet, the largest equestrian marketplace in Scandinavia, and MundoAnimalia in Spain. The business was started by two friends, Eyass Shakrah and Axel Lagercrantz. The pair felt that the existing processes of buying and selling pets were overly complex and too open to poor outcomes for breeders, buyers, and, worst of all, the pets themselves.  Their mission is to use technology to create a better, safer, and more efficient way for people to buy pets, but without compromising on animal welfare. Through smart partnerships and acquisitions, Pet Media Group has created or invested in market-leading brands and helped modernize the European pet market.