What Is the AARRR Framework?
When you launch a startup, you're under pressure to demonstrate growth fast. If you don't, then you're unlikely to stay afloat for long.
The AARRR framework is a set of metrics all geared towards achieving growth. It gives startups structure by providing them with five main areas of focus.
The acronym stands for:
The framework, which is often depicted as an AARRR funnel, was developed by entrepreneur Dave McClure. The metrics are sometimes referred to as pirate metrics (Not sure why? Say AARRR out loud!)
Who should use the AARRR framework and why?
The AARRR framework is an ideal approach for early-stage startups to adopt. It requires a low level of initial investment, and is designed as a learning process to be continually trialled and refined.
The AARRR framework is often used as part of a growth hacking strategy, which helps startups to achieve hypergrowth.
Need help growing your early-stage startup? Get in touch.
What do the AARRR metrics mean?
While startups should aim to improve every stage of the AARRR funnel simultaneously, it can be helpful to consider them in isolation.
How do people find you?
This part of the funnel is all about understanding how people learn about your company. It's the very first stage in the customer journey.
People can learn about you through various sources. These can include online content, an SEO strategy, social media channels, review sites or even direct conversations.
If you're not sure how people stumble upon your startup, you can start by reviewing your website's acquisition analytics. They will reveal visitors' typical points of entry to your website, and how they travel through your site until they 'convert' into customers or qualified leads.
While website analytics alone won't give you an exact portrait of the AARRR acquisition stage, it's certainly a good place to start.
From there, you can begin to understand which channels are the most effective at converting customers or users, and use this insight to inform your future approach.
When Gmail launched, it was only open to select users. For everyone else, it was invite-only. Dropbox used a similar approach. That created an air of exclusivity, helping to acquire more users from an early stage.
When do customers ‘get’ your product?
This is also known as your customers' 'aha moment' - the point at which they truly understand the value of your product or service.
The activation stage is the point at which people get excited about what you have to offer, and take action.
The activation point is different for every business. Some common examples include:
- Signing up to a service
- Downloading an app/software
- Requesting a demo
- Making an enquiry
Your goal is to understand what sparks that 'aha moment' for your customers. If you've already gained a pool of customers or users, you can ask for feedback to understand what encouraged them to take the leap.
Testing different value propositions and reviewing barriers to adoption can help you speed up the time between acquisition and activation.
What makes customers return?
The retention stage is all about understanding the secret ingredient that makes people return to your product or service time and time again.
We've all got excited about a new SaaS product or an innovative app, only to abandon it days later. That usually happens when a prospect is compelling enough to pique our interest, but not valuable enough to get us to stay.
The retention process is one of the hardest parts of the AARRR framework to get right. We need to work hard to make sure the product or service delivers on its promise.
Some techniques that successful companies use to retain customers include:
- Teaching people different ways to use the product and get the best use out of it
- Improving features to make it easier to use
- Delivering excellent customer service, whether automated or through direct communication
Again, using your detective skills to find out what is and isn't working will help you to enhance the retention stage of the funnel.
What makes customers recommend you?
We can all wax lyrical about our business' benefits. But the most compelling reason to try out a new product or service is a recommendation from a trusted friend, colleague or family member.
This part of the AARRR funnel is clever because your customers are essentially doing the hard work of recruiting new customers on your behalf.
There are many ways to generate referral business.
The most simple method is to encourage your customers to recommend you by... asking them to! You can remind customers to tell other people what they think about your product or service.
Going a step further, you can incentivise recommendations by creating a referral programme. This usually involves giving discounts or special offers to both the referring and new customer.
The renewable energy startup Bulb used this approach to great success, growing its customer base through a discount-incentivised referral scheme.
How can I encourage people to pay for the product or service?
The final stage of the AARRR framework is perhaps the most difficult. After the hard work of attracting customers and users, businesses need to work out how to convince them to pay for the service.
Often, startups begin by offering their product for free or at a very low price. The ultimate goal should be to persuade people to pay enough to exceed the cost of customer acquisition.
Some companies achieve this by offering tiered packages for enhanced features or introduce a subscription-based model to avoid daunting upfront payments.
Others look to different revenue streams entirely, such as advertising or memberships.
AARRR funnel: Constant refinement
Although the AARRR framework is depicted as a funnel, it's actually a continuous cycle.
Startups should think of the AARRR funnel as a process of constant refinement, seeking out areas to improve and enhance.
It's important to measure a startup's performance in each category using pre-defined metrics, so that you can gauge how effective your efforts have been.
This isn't something you can do just once; to achieve growth, you will need to be constantly monitoring, testing and adapting your approach to the AARRR funnel.
The AARRR framework is not the only set of metrics startups can focus on, and there may be other approaches that could better suit yours.
To make sure you're pursuing the right strategy, consider working with a growth marketing agency that can help you ask important questions about the direction your business is heading.
If you’d like help growing your startup, get in touch.