Develop a model for customer behavior and use metrics and analytics to measure your marketing efforts.
The AARRR model—sometimes also referred to as “Pirate metrics” based on how it sounds when you read it aloud—was developed by Dave McClure. This model is based on five types of measurement of user behavior:
Acquisition: Where/what channels do users come from?
Activation: What percentage have a happy initial reaction?
Retention: Do they come back and revisit over time?
Referral: Do they like it enough to tell their friends?
Revenue: Can you monetize any of this behavior?
About the AARRR template
What is the AARRR model?
AARRR is an acronym for the metrics that any startup should focus on. It stands for Acquisition, Activation, Retention, Referral, and Revenue. AARRR helps hone in on what you should understand about your customers, their journey, your funnel, and how you should set actionable goals for your startup. AARRR is commonly accepted as the five most important metrics for a startup to focus on.
What does AARRR stand for?
AARRR stands for Acquisition, Activation, Retention, Referral, and Revenue. Each of these letters represents a type of user behavior that can be measured—for example, acquisition can be measured by the number of people who visit your site or view more than two pages, while activation can be measured by the number of people who sign up for your email newsletter or who create accounts.
The 5 factors of AARRR
Acquisition - How can potential customers find my business?
Activation - How can I provide a good experience for my potential customers?
Retention - How can I keep potential customers coming back to my product or service?
Referral - How can I get potential customers to recommend my product or service?
Revenue - How can I turn potential users into paying customers?
How to create an AARRR model
Step 1 - To think about Acquisition, start with your total market. Who would benefit from your products? Once you have that pool of potential customers, think about how you might realistically reach them. That subset represents your reachable market.
Step 2 - In the Activation phase, think about the product or experience you want to deliver for your customer. Activation is when you turn a user into a qualified lead. What needs to happen for a prospect to become a customer?
Step 3 - During the Retention phase, think about how you can keep customers coming back. If a customer has subscribed to your product or service, how do you keep them from churning?
Step 4 - To think about Referral, start building a marketing strategy so your customers talk about your company.
Step 5 - To generate Revenue, start calculating whether your business model is sustainable and how you should price your goods or services.
Why use the AARRR model?
The AARRR model is widely followed within the startup world because these five metrics focus on growth while also being simple and actionable.
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