Market like a Pirate with the AARRR Framework

By Crystal Brabender, Acccount Manager

Today, September 19th, is International Talk Like A Pirate Day, and thus, a fun day to highlight one of the most important metric frameworks to live by as a startup marketer or to help you grow your business on during rough waters.

In 2007, Dave McClure, founder of startup accelerator 500 Startups, rolled out a 5-step framework for growth. That framework was called AARRR, or also known as the Pirate Metrics.

What is AARRR?

AARRR stands for Acquisition, Activation, Retention, Referral and Revenue and is a fundamental framework to understanding your customers, their journey and optimizing your funnel as well as setting some valuable and actionable metric goals for your business.

Pirate Metrics for Marketing and How They Work?

AARRR “Pirate” metrics effectively measure your company’s growth while at the same time being simple and actionable. Each letter stands for one of the five opportunities to measure customers behaviors.

1. Acquisition – “How do Customers Find You?”
Acquisition, the first A in the AARRR framework, describes how people find your business and eventually turn into your customer.

At Tingalls Graphic Design, we help our customers focus their marketing efforts and create effective call to actions that help website visitors convert to customers. You want to track every step of your customer journey in the funnel not just look at the final conversion to a paying customer. Every micro-conversion along the way counts. We like to focus on the different levels of engagement and know that the first time someone comes to a website they may not be ready to buy, but we want to create a level of engagement right from the start. You can “date” your customer before you “marry” them. Here is an example of many possible interactions before the purchase.

Website visit -> email signup for newsletter ->download a PDF- >webinar participation -> call with sales team -> conversion to customer.

There are many items that help with acquisition such as Search Engine Optimization, social media engagement, choosing the right domain, and other avenues to engage with your customers such as direct mail and tradeshows. You want your name to be top of mind when people think about your industry.

All those steps, before converting to a customer, count as micro-conversions and should be measured to understand your customer’s journey, optimize your customer’s journey and this will help you create the most effective marketing plan. These steps also help the customer to get to know your business and help to position you as a resource, industry leader and expert.

Three fundamental questions you want to be asking yourself about your acquisition:

  1. What channel is driving the most traffic (#)?
  2. What channel is driving the most valuable traffic, in other words, performs best (%) in terms of customer conversion?
  3. What channel has the lowest customer acquisition cost ($), i.e. cost per customer converted?

2. Activation – “How good is the customer’s first experience?”
Activation is about the first experience your customer has with your product. It is not enough to get people to visit your website, it’s crucial to get your user to the “Aha Moment”, which is the first time the user realizes the real value in your product, as quickly as possible so that they keep coming back. The time between when the user signs up and when they say “Holy cow, I love this”, that is activation in a nutshell. An activated customer is someone who keeps coming back to use your product.

Again, to get users to the “Aha Moment” as quickly as possible you want to make sure the on-boarding process is as seamless and enjoyable as possible. We believe that having a user friendly website is an important first step. Clear call to actions and easy ways for your customer to contact you are crucial. Our customers love that they can schedule appointments with Tara and view her schedule right from our website so they do not need to wait for a call back. Always think about your customers pain points and try to help them know that you can help.

3. Retention – “How many of your customers are you retaining and why are you losing the others?”
Retention means people regularly come back to use your product. The opposite of customer retention would be customer churn. In this stage, the goal of keeping your customers loyal to your brand is important because the expense to get new customers is much higher than the cost to retain a customer.

Customer Acquisition Rate > Customer Churn Rate = Growth

Customer Churn Rate > Customer Acquisition Rate = Burning a lot of money

So how can you increase customer retention? The easiest way is to keep a nice share of mind of your customers by staying in touch. Email automation is a great method for this and will not only help you keep in contact with your customers, but will also work to help you build yourself up as a resource. Another great, inexpensive way to keep customers engaged is through social media. Use this platform to position yourself as a leader in the industry, engage your customers in discussion to keep your product and messaging current and to make sure you know your customers pain points. When customers feel like they are important to you and you listen to their feedback they become lifetime customers. Following up with customers to get their feedback on your products and services can not only help you to retain customers, but can also help you continue to grow and truly be a leader in your industry.

As Bill Gates has said, “Your most unhappy customers are your greatest source of learning”.

4. Referral – “How can you turn your customers into your brand ambassadors?”
The absolute best way to drive growth is through referrals. Why would you spend large sums of money on marketing to people’s deaf ears if you can just have people they trust rave about your product to them?

To really drive referrals you need to have a systematic process in place that incentivizes and generates them on a consistent basis. A perfect time to ask for referrals is when you follow up with customers on how their experience has been. Also, when you are looking for referrals, try to focus on asking your ideal customers. Every business attracts varying levels of customers, but you can find your ideal customers if you look at which customers come to you over and over again and have diverse needs so they take advantage of opportunities to work with your business on many levels.

5. Revenue – “How can you increase revenue and gain more customers?”
If you’ve optimized according to the four AARR metrics before, revenue should already be flowing in nicely. Using these metrics will help you to simplify the complex sales process and and to stay on track even in rough waters. Many businesses have had to reinvent themselves to stay relevant, especially in 2020. Using these factors to help focus on the most important stages your customers go through and develop a sustainable process is the key to your success.

So, in honor of International Talk Like a Pirate Day, use these metrics to take charge of the wheel on your ship and steer your business to new successes!

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