What is AAARR?
AAARR is a framework that divides the customer journey into five distinct parts. Also referred to as the Pirate Metrics because of the AAARR sound, you can use this framework to identify which parts of your business are over or underperforming.
Each stage of AAARR houses a particular set of metrics. By grouping these metrics together into distinct clusters, you can get a better oversight of your business.
For example, imagine a scenario where your brand awareness is on point, but you don’t see it translating into conversions or revenue. AAARR helps you identify where you need to place your remediation efforts. In effect, it’s about finding your weaknesses to improve your business’s overall function.
The five stages of the AAARR framework
While it’s undoubtedly more fun to say AAARR, it’s essential to know what each letter stands for if you want to unlock growth.
Here is a quick breakdown of each stage of the pirate funnel.
All relationships have to start somewhere. Awareness is the stage where your prospects first become aware of your brand. There are lots of different ways you can get your brand in front of your target audience, such as:
- Search engine marketing: Ads on Google and Bing
- Social media marketing: Ads on Google, Meta, Bing
- PPC ads: Search and social media ads
- Collaborations: Promotions through websites or influencers
- Word of mouth/referrals: Recommendations from existing customers
Typical awareness metrics:
- Web traffic: General traffic to your website
- Landing page visits: Traffic that goes to your landing pages
- Impressions: For ads or social media posts
- Clicks: The number of people who click your ads
- Social media mentions: The volume of comments about your brand on social media
While a customer might be aware of your brand, that doesn’t necessarily translate into becoming a user. Think about all the brands you know that make products that you’ll never buy because the problems they solve are irrelevant to you.
The acquisition stage involves your target audience responding to your ads and engaging with your website. Some of the strategies you can use to drive acquisition are:
- Lead generation: Using forms, newsletter signups, webinars, e-books, etc., to get contact details
- Outreach: Depending on your marketing strategy, you can make calls or directly message customers
- Free trials and promotions: Apps and SaaS brands offer free trials and promotions to entice users to try their products.
- Events: Many brands run online and offline events to promote their products
Typical acquisition metrics:
- Conversion rate: The number of people who take a desired action on your website.
- Lead generation: Signups on your website or to your newsletter
- CAC: Customer acquisition costs refer to the average amount of marketing, and advertising spend it costs you to win a customer
- App downloads: If you run campaigns to promote your app, downloads are an important metric to track the effectiveness of your marketing efforts.
- Signups: Account creation on your website
Activation is the next stage. This step happens when customers start using your product, make a purchase from your website, or subscribe to your service.
Some good activation strategies include:
- Education resources; Videos, how-tos, whitepapers, and other content marketing that helps users understand the value of your products
- Social proof: Comments from other users that convince prospects your product or service is worthwhile
- Discounts and special offers: Incentives that encourage users to act now
Typical activation metrics:
- DAU and MAU: Daily and monthly active users
- Customer activation rate: The percentage of users that move from awareness and acquisition to activation
- Visitor to signup rate: The percentage of website visitors that turn into paying customers.
- Signups to subscriber rate: The percentage of signups that subscribe to your service.
Winning customers is important, but holding on to them is even better. Retained customers keep on bringing in revenue, but without incurring sales and marketing costs. This step can refer to return customers or active subscribers.
Some ways you can drive retention are:
- Retargeting campaigns: Ad campaigns that target users that have engaged with your product already.
- Content marketing: SEO and SEM content that helps users get value from your product
- Email marketing: Emailing offers, special deals, promotions, and helpful content.
- Great customer service: Problems happen, but how you deal is what defines whether you’ll lose a customer or not.
Typical retention metrics:
- Renewal rates: The number of subscribers that renew their contracts
- Churn rate: The percentage of your customers that leave during a fixed period
- CSAT: Customer satisfaction scores are a reliable measure of retention.
The revenue stage refers to how much money each customer brings in. These numbers are the ultimate culmination of the previous steps.
Some of the ways that you can increase revenue include:
- Target abandoned carts: Emails or ads that target users who have put items in their cart but haven’t pressed the buy button
- Promotions: Offers and promotions that target your existing user base
- Optimizing checkout flows: Reducing the friction or steps it takes to buy from your site
Typical revenue metrics:
- CLTV: Customer lifetime value refers to the average revenue you generate from each customer
- Number of transactions: The total number of separate transaction each customer makes
- Average order value: The value of orders that each customer places.
- Upselling and cross selling: Revenue generated from cross selling or upselling
Why AAARR is useful
One of the reasons why AAARR is so popular is that it’s excellent for the audit process. It breaks down different stages of the buyer journey and allows you to review each one separately.
Granular view of your business
A business is a complex and multi-faceted thing. It can seem simple when running well, and you’re driving revenue. However, when things aren’t going as planned, it’s easy to get lost.
Frameworks like AAARR help you break down your business and understand the constituent parts. Instead of dividing it by, for example, department, the AAARR framework looks at the different stages of the buyer journey to see where blockages are occurring.
In effect, the Pirate Metrics allow you to map your customer funnel and identify where you are losing users. This process will eventually make remediation much easier.
Help during the audit process
The audit process is an essential part of a smooth-running business. You must always keep an eye on what you are doing.
You should audit your buyer’s journey at regular intervals. AAARR improves the accessibility of this process by breaking it down into manageable chunks.
Once you’ve done your audit and highlighted where you need to improve, you need to get your remediation hat on. Basically, this stage is about fixing (or remedying) the areas that aren’t working.
By splitting things down into the five funnel stages, you can understand and address each one. If your revenue is unacceptable, you can go up the chain and find out what’s not working. For example, it could be because your user churn (i.e., Retention) is failing for various reasons.
What type of businesses can benefit from the AAARR framework?
David McClure was the first person to popularize the pirate metrics. His background is in startups and SaaS companies, so the framework works well for these kinds of businesses.
However, while AAARR might have its roots in startups and SaaS, it’s a useful framework for anyone who wants to grow and scale their business.
Remediation of the buyer’s journey starts with a robust audit process. The AAARR framework helps you understand the different steps a customer takes to become a loyal user.
Measuring the number of users that move between each stage can help highlight the weaknesses in your business.
Growing or scaling your business can seem overwhelming at times. Using a framework like AAARR improves the accessibility of the audit process and allows you to fix what isn’t working.