The AARRR framework helps improve the customer journey by moving below the surface of different channels or approaches. Discover this scale developed by Dave McClure in 2007.
In growth marketing or growth marketing, the ultimate goal is the overall and rapid growth of the business. All parts of the organization, from marketing to sales to product development, contribute to this. The various related contact points must be known and matched to each other like gears. For this, growth frameworks are used as a theoretical basis.
In this article you will discover exactly how the AARRR framework works and what the different phases look like in detail.
AARRR form in a nutshell
One of the most well-known frameworks is the AARRR framework, also known as Pirate Metrics due to its acronym. This scale was developed in 2007 by Dave McClure, a well-known American entrepreneur and start-up investor. The five odd letters are an acronym for the five stages that make up the growth funnel:
– acquisition (acquisition);
– activation (starting work);
Retention (frequent use/loyalty);
– reference (recommendation);
Revenue (business volume).
This approach helps your organization expand and grow as quickly as possible—and thus contributes to the ultimate goal of growth marketing. For each of the five levels, different and measurable indicators are used.
The model focuses on the life cycle of customers and measures their interaction with the company. The customer journey can thus be improved by using defined values and behavior patterns.
The AARRR framework is then considered a classic funnel-shaped sales or marketing funnel. Acquisition is the top of the funnel, and return is the bottom.
The five stages of the AARRR metrics
Through its five phases, the AARRR framework has been designed in an understandable manner, and is thus considered a benchmark in growth hacking. So it is also a benchmark for companies that want to accelerate, scale or scale their success as quickly as possible.
1. The first stage of the AARRR model: Acquisition
Under AARRR, it all starts with acquisition, i.e. prospecting or acquiring potential customers. The central question in the spirit of the framework is the following: How and through which channels are your potential customers interested in you?
It is not enough to register a simple number, say 10,000 page visits per month. The AARRR model goes further and analyzes not only channels, but their impact as well. The goal is to determine which marketing channels have the best conversion rate – always in relation to the outlets executed. Typical channels are:
– Social media (Facebook, Twitter, TikTok, Snapchat, YouTube, LinkedIn, etc.);
– Google ads.
– email marketing;
– Offline measurements such as flyers or posters.
Analytics of different platforms and channels act as measurable and usable indicators for determining conversion rate. In this regard, it is important to accurately define acquisition metrics. When is a lead considered part of the conversion funnel? When do you visit your website? If you stayed there for 20 seconds or only when you signed up for the newsletter?
2. The second stage of the AARRR model: activation
The central question in the second phase of the AARRR framework is: How good is the first user experience?
Once the user reaches your home page, the product or service should be presented to them in the most attractive way possible. The user wants it to be “activated”, and this is how we can literally translate the second stage of the form. This step can be achieved and measured in various ways. The most common methods are:
– Subscribe to the newsletter by e-mail.
– Elapsed time on the main page > 20-30 seconds;
– Download the content first.
This stage of growth funnel is also called User Onboarding. As in the first step, the conversion rate is a relevant KPI (Example: How many users come to the website and sign up for the newsletter?), the other refers to the measurable average visit duration.
3. The third stage of the AARRR model: retention
Of course, not all contacts remain after you “activate” it for the first time. Thus, the third step of the AARRR framework is about simplification, customer loyalty, or rather lead. The central question is: How many active users are kept?
In this context, we are talking about the retention rate, that is, the percentage of users who are still active during a specified period after the first connection. These time ranges may relate to months, weeks, or days in the case of rapidly changing business and service models.
The attrition rate is the corresponding to the retention rate. The general rule is: the retention rate must be higher than the attrition rate, otherwise rapid and sustainable growth is not possible.
4. The fourth stage of the AARRR model: Standard
If your customers use your service or buy your product, they are in the fourth stage of growth funnel. The central question at this point is: How many clients do they double?
If you exceed your customer’s expectations of your product, these people will become your company’s brand ambassadors. Thanks to the recommendations, you can benefit greatly and ensure succession so that your growth funnel does not dry out.
There are many ways to get current “fans” of your work to recommend it. These can be incentives such as an extra month of free use of the software or regular discounts. They can also be user referral schemes, which benefit both the existing user and the new user.
“Net Promoter Score” is the simplest and most effective way to measure the recommendation rate.
5. AARRR Stage 5: Income
Despite all the leads and conversion rates, the main objective of any growth marketer remains, along with fast and high traffic, to generate turnover. Thus, the fundamental question for the fifth and final step of the AARRR framework is: How to increase the turnover?
If the growth funnel is consistently regulated, nothing should stand in the way of repeat sales. This stage relates to increasing or decreasing revenue or cost per contact. Relevant indicators are customer lifetime value (CLV) and customer acquisition costs (CAC).
To determine it, it is useful to use tools and systems that detail both the turnover of different customers and their customer journey. For example, at what point in the buying process does a new customer give up buying a seat at the Monaco Grand Prix? How long does it take on average between two purchases from an existing customer?
CONCLUSION: AARRR Suppression is a Marketing Standard for Growth
The AARRR framework helps improve the customer journey by moving below the surface of different marketing channels or methods. It is important to precisely define the metrics used to evaluate the different stages of the model. Only then can we determine the relevant indicators with the right means.
Based on this, the growth path is optimized step by step, more leads are generated and conversion rates are increased. Since the fixed goal is growth and revenue generation, the AARRR framework ends with the last and most important stage. Tens and hundreds of thousands of website visits or hundreds of newsletter signups are worth nothing if no return is generated in the long run.