AARRR
I want to begin by introducing a framework called “AARRR”. In 2007, Dave McClure introduced a 5-step framework for growth called “AARRR” (or alternatively “Pirate Metrics”, think about it…”aarrr”? The sound a pirate makes…yeah). AARRR is a widely used framework for taking data driven action to improve marketing efforts throughout the customer journey. The name stands for the five stages of the journey: Acquisition, Activation, Retention, Referral and Revenue. In this section, I’ll take you through AARRR at a high level. However, for a deeper dive, there are a lot of good online resources. On that note, let’s jump in.Phase 1 — Acquisition
The first “A” in the framework is for Acquisition, the process of people first learning about you (aka “awareness”) all the way through to them taking their first “meaningful” action (the definition of which varies by business model). For instance for a SaaS platform, that might be a user signing up for a free trial, for an ad supported website, it might mean the first visit, and for an ecommerce site, it might be perusing product offerings for the first time. The point is, the definition depends on the context which can also be said for the framework in general. Its application is very circumstantial. Let’s look at some examples… Acquisition In Action – Example 1: Enterprise SaaS Platform For example, for an enterprise SaaS platform business an Acquisition flow might look something like this:- Step 1: Site visit
- Step 2: Email signup
- Step 3: Webinar attendance
- Step 4: Call with a sales rep
- Step 5: Sign up (for a trial and/or as a paying customer).
- 1: Analyzing user behavior patterns
- 2: Drawing insights
- 3: Asking questions and developing hypotheses
- 4: Designing experiments to test those hypotheses
- 5: Prioritizing work coming out any learnings and implementing improvements
- 6: Going back to #1 and starting the process again
- Which marketing channels are driving the most traffic?
- Why are certain channels excelling at driving traffic while others are not?
- Which marketing channels are driving the most valuable traffic?
- Why are certain channels driving more qualified visitors while others are not?
- Which marketing channels are most efficient?
- Why are certain channels more efficient than others*?
- Conducting analysis and drawing insights: looking at all data relating to those question sets and identifying suggestive patterns
- Developing hypotheses: developing hypotheses from the patterns you’re seeing
- Designing experiments and measuring results: designing and conducting experiments to test your hypotheses
- Applying insights strategically: prioritizing the work identified by the results of the experiments and implementing changes
Phase 2 — Activation
The next “A” in the framework is for Activation. Activation relates to the first time a customer recognizes the value they’re getting from a product or service and that realization serves to make them more loyal customers. It’s what marketers call an “aha moment”. Facebook defines its “aha moment” as when a new user obtains seven new friends in a period of ten days, an inflection point where a user becomes more engaged with the Facebook platform. And based on that insight, Facebook added ways for users to sync the platform with their email provider which made it so Facebook could dynamically suggest people to invite to Facebook from a user’s contacts. For Twitter, this inflection point is when a new user has followed at least thirty people, which is why Twitter always suggests accounts for you to follow. So let’s look at some Activation examples… Activation In Action – Example 1: SaaS Platform Going back to the SaaS platform example, for SaaS companies one of the critical steps in the marketing funnel is to give away free trials with the intention of ultimately converting these trial customers into paying ones. So converting people into paying customers after the free trial period is vital to the sustainability of the business. And in this case, free trials are an expense, they don’t generate any revenue and cost a lot to support, so the business lives or dies based on how well it convinces trial customers to become paying ones. In the context of our framework, signing up for the free trial constitutes Acquisition but without the Activation step the business model doesn’t work. So how might Activation be done effectively? In short, by helping trial customers get more value out of the platform and thus helping them justify the cost of subscription. Some ways that might be done include:- Approach 1: Offering video tutorials to trial customers in an effort to turn them into more effective users of the platform. Ones that can take advantage of the productivity gains it affords.
- Approach 2: Make it easy for trial customers to integrate the platform with other software tools they’re already using so together the two platforms provide a better overall solution for the business than either one does on its own.
- 1. Measure the conversion rate (video completions)
- 2. Assess what the data is saying
- 3. Formulate hypotheses to explain it
- 4. Based on the hypotheses, design and execute experiments for ways to make the training videos more engaging and effective.
- Starting checkout
- Carting a product.
- Registering.
- Subscribing to a newsletter
- Getting visitors to sign up for promotional emails by making an attractive pitch with your marketing messaging (Activation)
- Getting email recipients to buy by offering attractive deals in your emails (Revenue)
- Getting these new customers to buy again by providing excellent customer support (Retention)

Phase 3 — Retention
Retention means different things for different businesses. For a SaaS business, high retention generally means that people are subscribing, actively using, and importantly, staying subscribed. For an e-commerce business, it’s measured by repeat purchases. In any case, Retention, as a marketing discipline, is about building high enough engagement with existing customers that they continue buying your products or services and Retention is arguably the most important marketing activity for any business. Consider the following from the perspective of conversion optimization:- Increasing retention by a mere 5% can lead to a 25-95% increase in profits (Harvard Business Review)
- The probability of selling to an existing customer is ~60-70% whereas selling to a new customer it is only ~5-20% (ClickZ)
- Analyze and Interview: Look at user behaviors for patterns that indicate adverse effects that explain your Churn. And solicit feedback from customers to better understand their behavior — why they unsubscribed, why they didn’t purchase again, etc. Net Promoter Score (NPS) is a great method for understanding the level of satisfaction of a customer base and garnering actionable insights for improving it (more on NPS below).
- Develop Hypotheses: Think about ways you might address these customers’ issues.
- Design Experiments: Design experiments to test your hypotheses.
- Analyze Results: Analyze the results of your experiments
- Prioritize and Implement: Prioritize the work implied by those results and develop an implementation plan.