The AARRR metrics framework, also known as the Pirate Metrics or the AARRR funnel, is a set of startup metrics used to monitor user behavior to support business growth.
The five user-behavior metrics business owners should be tracking include: acquisition, activation, retention, referral, and revenue.
These metrics help companies understand how potential customers discover them and what they do once they learn about their offering. They provide insights into whether their user base is being acquired, activated, retained, referred, and converted into paying customers.
The AARRR framework was developed to provide CEOs and founders with a straightforward, universal strategy for developing a business model based on customer behavior. By examining how customers and prospects engage with a brand, companies can then refine their growth efforts and improve marketing initiatives.
The end goal? Help business owners, product managers, marketers, and investors track the performance of growth drivers when creating a scalable and sustainable business.
The AARRR framework is one of the most popular frameworks used by founders and growth teams to understand where they stand in terms of sales growth, marketing performance, product development, and customer support.
It responds to a set of questions that all founders should address to position their businesses for success.
1. Set the business goals
Setting broad goals is the first step in every business strategy since it establishes the organization’s definition of success and provides a standard by which to gauge its progress.
2. Identify the AARRR pirate metrics
The following phase is to determine the conversion metrics for each stage of user behavior. Below are some examples for each of the five stages.
3. Establish a tracking system to evaluate the AARRR pirate metrics
Once all of the data from each stage of the AARRR framework has been collected, company executives must build a monitoring procedure to analyze the data and determine whether or not their product management and marketing efforts are effective.
4. Test user behavior and consider alternative approaches
Finance managers can identify customer journey optimization opportunities by conducting A/B tests. Which should also result in higher retention rates by paying attention to what potential customers and engaged product users prefer.
5. Improve operations based on outcomes
Lastly, business teams have a unique opportunity thanks to the AARRR framework to not only learn what works and what doesn’t but also to act and modify their operations and initiatives in light of the findings from behavioral tests.