AARRR, or the Pirate metrics framework, is a simple intuitive methodology that can be applied to any company to drive profitable growth.
At its simplest, the acronym AARRR describes user progression through a product’s lifecycle: Acquisition, Activation, Retention, Referral and Revenue.
By tracking the actions that users take at each stage of the life cycle, businesses can optimize conversion and hone the product to drive results.
It was initially created by Dave McClure, ex-operator and multiple VC founder as a way for businesses to better understand their customer lifecycle and their growth levers.
It has come to be understood as
- A way to describe a user funnel through product stages
- A growth loop
- A way for a business to set up their key metrics
- A growth scorecard for internal and external business stakeholders
In this guide we’ll walk you through AARRR, share a Pirate (AARRR) metric template and talk about how to derive value from this methodology.
Introduction to Pirate metrics (AARRR)
Pirate metrics at the simplest level describe a user’s progression through a product:
- Acquisition: users visit the site
- Activation: users engage with the site
- Retention: users come back to the site
- Referral: users tell other people about the site
- Revenue: users buy from the site
The acronym of the five inputs spells out ‘AARRR’ which is memorable and allows us to make pirate jokes.
A simple Pirate metrics (AARRR) funnel might look like this:
Acquisition: 1m unique users visit Site X
Activation: 150k of the acquired users create an account
Retention: 75K of the activated users come back to the site
Referral: 10k retained users invite other people to the site
Revenue: 5k retained users buy from the site
Get the Hustle Badger Pirate metrics template here
Conversion rate optimization
The goal is to define the AARRR checkpoints and then measure conversion percentages through that funnel to understand performance and where to make interventions.
Our simple Pirate metrics (AARRR) funnel might now look like this:
Acquisition: unique visitors visit Site X
* Checkpoint: First visit, measured as new visitors to Site X
* Unit of measurement: 1m unique (dedupe visits for unique visitors)
* Conversion: 100% of users we’re measuring, or not applicable as first stage in the funnel
* Intervention: How can we drive more first visits and make the number of people we put into the site increase? Can we get 1.2m visitors?
Activation checkpoint: create account
* Checkpoint: 150k of the acquired users create an account
* Unit of measurement: Number of accounts (assume users make 1)
* Conversion: 150k accounts / 1m unique users = 15%
* Intervention: How can we make it more attractive to create an account? Can we get 17% conversion?
Retention checkpoint: comes back to site
* Checkpoint: 75K of the activated users come back to the site
* Unit of measurement: Number users acquired who revisit in xx time period
* Conversion: 75k activated users revisit / 150k users who activated (created account) = 50%
* Intervention: How can we bring more people who create accounts back to the site? How often do they need to come to buy?
Referral checkpoint: invites another user
* Checkpoint: 10k retained users invite other people to the site
* Unit of measurement: Number of unique users who send invitations
* Conversion: 10k unique users send invitations / 75k retained users = 13% conversion rate
* Intervention: How can we get more of our users to invite other users?
Revenue checkpoint: buys from the site
* Checkpoint: 5k retained users buy from the site
* Unit of measurement: Number of unique users who purchase
* Conversion: 5k retained users / 75k retained users = 7% conversion rate
* Intervention: How can we monetise more of our users and how can we make those who monetise more valuable?
You can calculate conversion percentage in different ways
- Sequentially by stage: In the above example, we have calculated conversion sequentially: at every stage, you are left with xx users, and xx% of them go on to perform the next action
- As a percentage of your visiting or activated users: this can be better if people skip stages, i.e. they create an account, and buy, but never actually return to the site.To do this, you divide user count at each stage of the funnel by the parent success metric you choose. This could be total users or activated users.
The value of tracking conversion through the funnel in is that it helps you
- Create a baseline and forecast ahead: if you put X in, you know roughly what you’ll get out
- Monitor changes: Help, all the numbers changed – identify problems early when things diverge from plan
- Understand anomalies based on user characteristics: Why are users from this campaign converting so poorly to activation? What changes do we need to make?
- Understand if you have a universal problem: 95% of potential customers drop at this stage – we need to solve
- See improvements: you should be taking actions that change the conversion rates
Dos and don’t when calculating Pirate metrics (AARRR) conversion
Best practices when tracking Pirate metrics (AARRR) lifecycle conversion
- Use a unit of measurement which makes sense all the way through the lifecycle: for example, you’re measuring purchasing users at the bottom of the funnel. Therefore measure unique visitors at the top of the funnel, as you want the user view, not the visits view (1 user might visit 2 times).
- Metrics should be connected and sequential: avoid picking disconnected metrics which don’t relate to each other. For example, picking people who sign up for courses, and matching that to people who comment in the community.
- Use timeframes: grouping your metrics by timeframe will help you cut noise. For example, for Retention, rather than saying: did they ever revisit, you might want to say: did they revisit within 1 week?
- Pick a reliable metric: avoid metrics which are hard to measure or inaccurate. Make sure you can score routinely without difficulty.
- The metrics should drive performance and be something you can take action on: this is a practical exercise where you want to take interventions.
Understanding referral in Pirate metrics (AARRR)
Referrals as growth loops are powerful, but there’s a right and a wrong time to build them and turn them on.
You should be really sure that you have product market fit, and that word of mouth / organic advocacy is already happening before you launch, as otherwise all you’ll do is burn prospective users.
The first stage here therefore is to try to verify your product market fit:
- Is your CSAT above 80
- Are your customers scoring you 4.5-5 stars
- Is your NPS above 60
- Are you scoring above 40% on the Superhuman Product Market Fit survey
With this confirmed, you should be looking to understand if referral is effective and optimize it until it is.
Your goal with referral cycles is to find users who refer other users (and target, incentivise and increase that pool), and who refer valuable users (people who activate on the product).
You want this information because
- Non-linear growth potential: Users referring other valuable users accelerates value creation
- Cost efficiency: Users bringing other valuable users is cheaper than going to market to source them as a business
- Informs business strategy: if you’re not acquiring users who refer other users to you, you need to review product market fit in conjunction with your GTM strategy.
Developing Pirate metrics (AARRR) further
However, the real value in Pirate metrics (AARRR) goes beyond a simple conversion funnel. Let’s dig deeper.
Here are five ways you can build on your AARRR funnel to get a deeper understanding of your business:
- Estimating user values – understand if you can increase value via interventions and what you can afford to pay per user
- Understanding break even – building towards a profitable company by understanding the impact of different levers
- Segmenting lifecycle – becoming precise in your interventions by finding pockets of waste and value
- Optimizing from the top down – working to the deepest level in the lifecycle and using that to inform every stage that comes before it
- Identifying true checkpoints – moving beyond off the shelf metrics to find the real indications of acquisition, activation and so on in your customer’s lifecycle
Estimating user values
Similar to assigning conversion values to each stage in the funnel, you can assign a monetary value to each user at different stages in the lifecycle.
To do this you calculate up the AARRR funnel based on the total revenue number your purchasing users generate.
Let’s give an example:
Revenue: 5k users bought; and in total the company received $250k. Each user on average spent $50.
Referral: 10k users invited other users. The company received $250k in revenue. The 10k referring users are worth $250k / 10k = $25 each
Retention: 75k activated users came back to the website. $250k / 75k = $3.33. Each retained user is worth $3.33.
Activation: 150k users were acquired. $250k / 150k = $1.67. Each activated user is worth $1.67
Acquisition: 1m unique users were acquired. $250k / 1m = $0.25. Each visitor is worth $0.25.
Assigning values to users is key for several reasons:
Calculate intervention impact
In the below example, we have taken the above AARRR metric example, and changed the percentage of unique visitors who create an account from 15% to 17%. This results in an incremental $33.5k / 13% uplift on revenue.
Initial AARRR metric conversion and value outputs:
Impact of activation metric intervention modeling:
Impact modeling is an effective tool to understand what initiatives you should prioritize, and gives comfort that your roadmap will deliver ROI.
Get the Hustle Badger Pirate metrics template here
Create profitability benchmarks
Assigning values is a basic proxy for a unit economics calculation.
A unit economics calculation is where you calculate the values and costs per unit and per user at each stage through the P&L. This allows you to understand whether your business is viable and what profit margins you have at each stage.
If you have calculated value at each lifecycle stage, and you know what you spend on users (roughly) you can work to improve profitability.
It’s key to continuously monitor and optimize lifecycle values and costs because:
- Getting to profitability at different lifecycle stages demonstrates business viability and determines investment
- Increasing value and lowering costs allows you to reinvest back into user acquisition and grow faster
- It moves around: different user sources, different journeys and different stages of company maturity tend to have different user values and costs.
How might this work:
Example of one intervention the group could do
In the above worked AARRR funnel, visitors to the website are worth only $0.25. The marketing team come back and say that the cheapest they can acquire users via paid marketing is for $0.35 per visitor. This means that the business needs to switch to a lower cost acquisition strategy. Examples of these include: building an organic traffic base via blogs, referral and PLG loops. Marketing and product work together on a CMS solution which allows marketing to publish a lot of blog pages, and to design and test referral schemes and loops. Over the next 6 months, the business acquires an extra 300k users at $0.10 cost each.
Example of another intervention the group could do
The marketing team sit down and work through the visitors they are acquiring. They look at the user profile, which channels they come from, and which geographies. They identify several opportunities to scale up visitors that they can attract at $0.22, thereby increasing total visitors to the site. These are: 1) test changing the copy on landing pages to speak more to women aged 35-45 living in cities with children, 2) develop a suite of product landing pages. Product facilitates marketing by allowing them to self-serve landing pages to be able to send traffic segments to the new pages and test the new strategy.
Example of yet another intervention the group could do
The product team conduct a customer journey mapping exercise with marketing, and discover there are several friction points in the activation journey where users are dropping out, depending on user entry points to the site. They design a series of A/B tests to remove friction points, and work with marketing to design a ‘happy path’ site entry strategy. They are successful in improving activation rate from 15% to 17%, which increases value per user at acquisition stage to $0.28, a 13% uplift.
Managing unit economics
Dave McClure initially invented Pirate metrics (AARRR) as a framework for how he wanted the companies he invested in to measure their performance. As such he built into it a profit monitoring system.
We’ve already discussed assigning values to different lifecycle stages, but in addition the initial AARRR framework mandated measuring minimum revenue and breakeven on a per user level
Here’s the definition of minimum and break even revenue:
- # users achieving minimum revenue – Revenue collected per user covers all variable costs associated with servicing the order (operating + sales and marketing costs). This means that users break even after gross margin, and whatever it costs to acquire the user. In essence it means if this user uses your platform it doesn’t cost you any extra cash: they cover the costs of using your platform, but they don’t yet cover the investments you made in creating the platform. However if they stay and use your service, you’re not losing any money.
- # users achieving break even revenue – revenue collected per user covers all business costs (all variable and fixed costs). This means the business does not spend more than the user is worth, and the user is profitable end to end for the company. That means that this user is paying all of the costs associated with them: from all the money you spent building a website, to what it costs you to deliver the order.
Let’s walk through an example, using Deliveroo:
User achieving minimum revenue:
User spends £32 on their food delivery order, including a delivery and service fee. Deliveroo gets 40% of that, which is £12.80.
Variable operating costs come to £8.50. This includes AWS fees (keeping the website up), Stripe payment processing fees, a share of customer service costs, and the cost for the driver to deliver the order.
Marketing and sales costs come to £4.22: marketing were able to acquire this order for £4.22.
At minimum revenue level there’s £0.08 left.
However, overhead (fixed) costs per order are £3.78. This user therefore does not break even for Deliveroo, but they do contribute 8 pence towards overhead costs, and their order doesn’t burn any of Deliveroo’s cash.
How could that user have broken even for Deliveroo?
They would have needed to place an order of £41.25 or more.
If they had done that, Deliveroo would have received £16.50 for the order (41.25 *40%), which minus variable costs (£16.50-£8.50) and minus sales and marketing costs (£16.50-£8.50-£4.22) would leave £3.78 left to cover fixed overhead costs.
The user would have broken even for Deliveroo (all money received by Deliveroo – minus all costs for Deliveroo = £0).
The user could also place a lot of orders, each of which left a little bit of profit after variable operating and sales marketing costs, which in the end added up to enough to break even.
These metrics are important for many reasons. Let’s break them down.
Company viability:
- No incremental cash burn to service a user: If users cover minimum revenue, on a per order basis the company does not lose money from them using the service. There are lots of reasons why a company might want to have users who don’t contribute to overall profit, but don’t burn any money either, such as network effects and word of mouth.
- Customers tend to sit on a spectrum: typically when you map your customers out from a unit economics perspective, you’ll see that some cost you a lot of money, some make you a lot of money and some sit in between. By looking at customers in the minimum revenue bucket who don’t burn any of your cash and seeing if that number is increasing is a way to see if you’re moving towards profitability. The more users who are covering their own costs is an indicator that they might start to create surplus cash for the business. Often tech companies are working towards profitability.
- How to get profitable: You can get profitable in a couple of ways as a tech company. You can have majority breakeven customers. Or you could have lots of customers who generate a little bit of profit after minimum revenue, and have a high enough volume of those that it covers your fixed overhead costs. In essence this gives you two levers to accomplish it.
Managing to these metrics has a lot of value:
- Break-even revenue per user is the finish line and gives an indication of how the race is run: Identifying the type of customer who becomes breakeven is very valuable for companies. It’s information they can feedback into acquisition and activation strategies and use to create more value.
- The number is a useful number: it gives you an exact number you can spend per user at each stage of your P&L, and allows you to manage to it.
- Forcing function: you might be wondering why managing to the operating cost minus the sales and marketing costs level is better than managing to gross margin positive when it comes to day to day efforts in the team. The reason it’s better is that it ensures commercial and product collaboration across the whole AARRR lifecycle. It forces an ecosystem mindset, and makes commercial accountable for operating metrics, and makes product accountable for commercial metrics.
Optimizing from the top down to the deepest level
It can be tempting to view the different stages of the lifecycle as hand off points between teams or functions.
Common examples include siloed work on activation from product teams, and friction between commercial and product teams post acquisition.
Pirate metrics (AARRR) work best when the lifecycle is understood as an ecosystem, and the people who build and the people who market the product are both investing in a partnership to make those activities successful from end to end.
Examples of this:
- The type of product dictates the type of user you can acquire
- The types of users you acquire impact monetisation rate
- Users from different sources activate at different rates
- Landing and activation journeys impact customer value
- Different types of users cost more at the operating cost level and at the sales and marketing cost level
Go-to-Market approach and Product strategy need to inform each other. If you don’t understand the use cases, the economics and the characteristics of your product, often what happens is that something gets built that commercial struggle to take to market, resulting in a whole heap of frustration on both sides.
‘The basic idea is this: you can’t build a product unless you know how to talk about the product. You can’t be an expert in making the product unless you’re also an expert in the marketing of it… If you build a great product and no one knows about it, did you even build a product?’ – Brian Chesky’s New Playbook, Lenny’s Podcast
Segmentation for precision
Not all users are created equal. Many things impact how users behave in your lifecycle, the cost to acquire them and the subsequent value they create:
- Channel mix: where they came from
- User segments: characteristics of the user
- Messaging: how we talk to them
- Landing and product entry points: where we land them onsite and where we take them
- Steps in the life cycle: how many steps they take on their user journey
Gaining segment information will allow you to identify pockets of wastage and pockets of value, and make your interventions more precise.
Over time you should be looking to be able to filter your Pirate (AARRR) metrics by multiple dimensions. But if you can’t do this in the beginning, don’t worry – start with what you have and fill in the gaps later.
There’s many different methods you can deploy to fill in the gaps:
Quantitative measurement: traffic analysis
- Track unique user conversion percentages through lifecycle stages, including wastage: where it happens, what they do as a result
- You can do this for all your users or pick a sample of users depending on your needs
Qualitative measurement: user research led
- Run sessions with users to see what they do, and extrapolate from individual priorities to have requirements
- Select a small number of representative users and derive lifecycle hypotheses from there
Comparative measurement: test led
- Using A/B or multivariate tests to compare what a subset of users do in one scenario versus another
- Test copy, graphics, and which UI is most effective
Competitive monitoring and tracking
- Use SEO, paid ad, traffic analysis and user satisfaction review sites such as Trustpilot to track competitor activity against yours
Identifying the true checkpoints
It’s fine to start with off the shelf metrics to build out a first iteration of Pirate metrics (AARRR).
However if you are optimizing down to the deepest level, you will quickly notice flaws, such as:
- We defined activation as [creating an account], but we notice only a small percentage of people who take that step go onto buy. Is this really the right activation metric?
- We defined retention as [returning to the site 3 times in 30 days], but we can’t track purchases back to this activity. Is this the right retention metric?
Selecting the right metric at each stage is critical to allow focus, and to deliver outsize results via lasering in precisely to pockets of value.
Your goal is that over time your Pirate (AARRR) metrics become increasingly precise . For example, you might:
- Define acquisition as a specific type of user, who engages with a specific part of the website
- Define activation as when a user invites another user to browse their Notion (over 10 seconds on site)
- Define retention as 3 orders delivered in less than 43 minutes in 1 month on a food delivery app
- Define referral as B2B client expansion for a large SaaS company looking to land and expand accounts
- Define revenue as upgrade from pay per order to subscription for an ecommerce company
Typically you discover the true tipping points for users either by
- Experimenting and seeing if it moves the needle: forward looking experiments, where you create a hypothesis and see if numbers change
- Regression or cluster analyses of key drivers of user adoption onsite: backward looking analysis where you look into historic needle movers
Another way that people often uncover their true checkpoints is to introduce multiple metrics at each of the lifecycle stages, measure both, and see what becomes meaningful to the business.
Example of this in action:
Acquisition:
‘Let’s measure all new visitors to the website, but we have an hypothesis that only users who visit the product listing pages are valuable to us, as it’s on those pages that they add items to cart. Let’s also only measure users who we know definitely engage with product listing pages, so let’s say they have to be on those pages for 5 seconds or more to be counted. We’ll look at both for a bit and see what’s meaningful.’
Going deeper on Pirate metrics (AARRR)
Even once you’ve gone this far, there’s still more you can get out of Pirate metrics (AARRR). Let’s dig even deeper:
- Understanding Pirate metrics (AARRR) as a growth loop
- Building a 1 page business dashboard
Understanding Pirate metrics (AARRR) as a growth loop
Pirate Metrics (AARRR) have 2 growth loops built in:
- Retention loop: by retaining users, you compound growth (and revenue) over time. The longer users stay with you the greater the value you receive from them.
- Acquisition loop: using users to acquire other users is extremely cost efficient. In addition when users pay for a product this gives the company money that it can invest to buy more users.
Although often understood as a funnel, visualizing Pirate metrics (AARRR) as a growth loop can be helpful to understand how you’re attempting to accelerate business value.
It’s also key to avoid linear traps, such as conceptualizing AARRR as a step by step process framework. You can intervene where it makes sense to intervene on the growth cycle – rather than intervening sequentially.
A good illustration of this comes from Gabor Papp’s adaptation of AARRR to RARRA: Retention, Activation, Referral, Revenue, Acquisition.
Papp found that too many people were interpreting AARRR as a process map, and focusing on it as a linear sequence of steps to take.
But in his context (app led businesses), acquisition without retaining users was an expensive vanity metric. Without having a viable product that activated and retained users (product market fit indications) acquisition was wasteful. Users cost too much and were worth too little.
It was time to do more work on the product. Reordering the funnel put the emphasis on the fundamentals of the product: retention and activation, and helped him manage his team to that goal.
Building 1 page business models with Pirate metrics (AARRR)
Pirate metrics can be used to map out your business’s growth model and provide a simple 1 pager for investors and the company to explain what you are trying to do, and how it’s progressing.
To make a 1 page business model
- Define the user segments you are servicing. For example
- In marketplaces, you might have 2 or more marketplace ‘sides’ or user sets: user, supplier, distributor are all common
- In SaaS companies you might have different user personas: B2C, self service teams, Enterprise
- Map your pirate checkpoints per stage in the user lifecycle: which action the user takes at each stage of the user lifecycle
- Place your user segments side-by-side and display as a simple table
Example 1 page business model [Deliveroo]:
As you can see, it’s powerful when the different user segment metrics also contribute to value for the other user segment. For example, restaurants getting great reviews creates a virtuous cycle for users. Users making a lot of orders creates liquidity for restaurants.
You can then easily replicate this business 1 pager as a scorecard and track those metrics over time to swiftly understand business health, communicate with stakeholders and maintain focus on core interventions.
Roles of different teams in Pirate metrics (AARRR)
Each function needs to understand their role in the team optimizing the flywheel, but every player in the team needs to feel accountable for winning the match.
It’s key not to work on sections of the funnel (i.e. standalone retention interventions) without understanding the system as an ecosystem and working collaboratively to optimize the whole system.
That might mean there are times where the product is the focus, and times where go-to-market is the focus. The goal is to optimize the machine as a collective, not sections of the machine sequentially and in isolation.
Founder / CEO’s role
Founders & CEOs should have a clear understanding of the product they are trying to build, the customer lifecycle they expect, and what that means for go-to-market and business viability. They own creating focus on the ecosystem and accelerating optimization activity.
The questions a founder is trying to answer using Pirate metrics (AARRR) are:
- Acquisition: Can you get users to your site, at scale, at an acceptable cost, who will perform the actions you want them to take?
- Activation: Do those users who come to your site have a happy user experience and begin to engage with your product?
- Retention: Do those users come back again, and do they come back multiple times?
- Referral: Do those users like the product enough to refer others? Do the people they refer activate as users themselves? Do we really have product market fit?
- Revenue: Do those users conduct some monetisation behavior? Do they buy and are they profitable?
Pirate metrics (AARRR) are a useful framework for this because
- They force the business to map out its assumptions: on acquisition, on customer type, and on customer lifecycle – and then continuously iterate those hypotheses as they gather more and more real data points
- They show how well the business is doing at solving for that customer lifecycle and where they’re falling down in terms of conversion, product market fit, and strategy
- They demonstrate if the business model is viable: have you brought people to your business and converted them? What were they worth? What did they cost? Do the unit economics make sense? Do you need to go back to the product and review PMF?
- They help with sequencing: providing a roadmap for where to intervene with urgency
Creating a single shared scorecard which lays out your hypothesis of the customer lifecycle, and synthesizing it down into 5-10 metrics therefore will help
- Communicate your strategy and vision to the company
- Measure performance and iterate towards growth; ensuring everyone understands their role within the lifecycle and how they contribute
- Assign metrics and accountability, allowing you to manage the process.
Key question: What metrics do you choose to watch?
Commercial’s role
“I totally get it. Marketers want to market. They don’t want to work on retention UI/UX/product. They think that “UX is for UX people” and “Product is for product people.” As a marketer, their “job is to acquire users”. While entirely understandable, the mentality of “whatever happens after the acquisition is for everyone else to figure out” is reckless and wrong.” – Gabor Papp
Commercial and product need to play as a unified team; consistently iterating every stage in the life cycle dependent on the data and insights they receive as they work through different initiatives.
Questions Commercial should be trying to answer:
- Can I scale my customer count: where does the volume of customers who convert down the funnel come from? Can I afford to scale them?
- How can I save money? What is the best cost / customer value ratio I can offer the company?
- Where do I get the best performance (defined as conversion through the funnel)? Where do I get the best value users?
- Where can I work with product to deliver maximum company value?
In order to play their part in that, Commercial need to:
- Design and test multiple different go-to-market channels, customer types and messaging
- Measure and take responsibility as far down the conversion funnel as possible: taking the values as a proxy for predictive user value, and focusing on lowering the future cost of acquisition to drive maximum company value
- Segment, select and attract future customers who take action at the deepest possible funnel levels, with a bias towards those who monetise and those who refer
Key question: Which go to market channels do you pick and which customers do you target?
Product’s role
‘There’s still a proliferation of folks, in the investment community as well, who think that if you build a great product, it will market itself, and I think that’s fucking bullshit’ – Dave McClure
Product’s role is to enable the product to be successful, via achieving product market fit, creating optimal user journeys and enabling go-to-market.
Questions Product should be trying to answer:
- Have we got product market fit? Are activation, retention, user satisfaction levels truly demonstrating we have a successful customer lifecycle?
- What can we improve about the product? Can we optimize the marketing platform and the product to drive more value?
- How can we create more user value?
- Where can I work with commercial to deliver maximum company value?
In order to play their part Product need to
- Achieve product market fit for a clear customer type with defined use cases: who it is for and the value they derive from the product
- Build features which increase conversion and optimize for growth: measure and take responsibility as far up the funnel as possible
- Optimize their existing product: improve sequentially rather than shipping more products
Key question to ask yourself: How do you choose what to build?
Advantages and disadvantages of the Pirate metrics (AARRR) framework
The Pirate metrics (AARRR) framework works best when
- There’s some user volume to analyze
- When everyone involved understands it as an ecosystem and plays accordingly
- When you adapt it to your given context: according to different business models, and adapting the different checkpoints to the true checkpoints in your customer lifecycle journey
- When it’s led from the top as a methodology
It has limitations when applied to sites with
- Very few or anonymized users
- Later stage models where user lifecycles are very mature
- Used without adaptation to business context or model
- When teams don’t collaborate to use the tool
- When companies use it sequentially: and move to acquisition focus before product market fit
Wrap up on Pirate metrics (AARRR)
Pirate metrics (AARRR) are a useful tool that can be applied to many industries and contexts. As a result it’s stood the test of time pretty well.
Investing time in adapting Pirate metrics (AARRR) to your business context, defining your checkpoints, measuring your conversions and values is a great way to iterate your business from a product and go to market perspective. Its simplicity is a strength, and it’s worth investing effort in to analyze your business performance in this way.
Avoid pitfalls such as: seeing it as a simple funnel, not calculating value benchmarks, and following it as a sequence.
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FAQs
What is the pirate metrics funnel?
The pirate metrics funnel is a way to measure your customer lifecycle, how users progress through stages, and how valuable they are at each stage of the cycle. Pirate metrics do this by measuring user progression though AARRR. AARRR stands for Acquisition, Activation, Retention, Referral and Revenue stages of the user lifecycle.
What does AARRR stand for?
AARRR is an acronym of 5 stages in the pirate metrics funnel. It stands for Acquisition, Activation, Retention, Referral and Revenue. Combined they make up the pirate metrics, which is a framework for measuring conversion and user values through the customer lifecycle. AARRR!
