AARRR is an acronym for Acquisition, Activation, Retention, Referral, and Revenue.
AARRR is commonly accepted as the five most important metrics for a start-up to focus on. This framework can help you understand more about your customers, their journey, and how you can set actionable goals for your start-up.
The 5 factors of AARRR
The AARRR model is divided into the following metrics:
Acquisition — What are some ways a potential customer can find my business? Identifying all the channels that a consumer could use to find your business is involved in the acquisition phase. These include:
- SEO
- Social media
- Inbound marketing campaigns
- Email marketing
- Paid advertising
Activation — What can I do to give potential customers a good experience and encourage them to buy? Your efforts to acquire new customers have been successful. Now you need to focus on how to convince them to take action and become full-paying customers. This is where the Activation stage comes in.
Retention — What are some ways I can keep my customer base coming back to my product or service? Your consumers are showing interest in your business, so now is the time to focus your efforts on retaining them. This means keeping their interest in your business and encouraging them to come back and make another purchase.
Referral — What is the best way to get a customer to recommend my product or service? Having recommendations and reviews from customers is important for start-ups and small businesses. These help to make the brand seem reliable and increase the potential customer base. The focus during this stage of the AARRR process is on how to get customers who have already used the product or service to recommend it to others.
Revenue — What are some ways to ensure that the business is growing profitably? After taking the previous four steps, the final step is to increase revenue. This is the only way to see if your efforts have been successful in growing profitably. This is the goal.
Why use the AARRR model?
The AARRR model is beneficial for businesses, especially small businesses or start-ups, because the five metrics focus on growth and are simple and actionable.
Let's take a look in more detail what benefits may bring AARRR model:
- Use resources wisely. The AARRR template can help small business owners and start-ups invest their time and money wisely, as they have smaller budgets than larger organizations and need to make the most of their resources.
- Better understand customer behavior. AARRR is designed to give you a comprehensive view of your customers' behavior by mapping out the customer journey. By tracking various customer touchpoints, you can generate metrics to gauge success. As a result, you will have a much clearer understanding of how your customers interact with your brand.
- Provide a better customer experience. You can offer your customers a better experience by understanding who they are and what they expect from you. For example, you can personalize your marketing efforts to increase engagement and improve the overall buying experience by understanding what your audience wants.
How to use the AARRR template
You can easily create an AARRR model with FigJam by selecting a template and filling in the information. You can also customize the template to make it perfect for your team.
What exactly should you include in your AARRR template? Here are five steps to give you a good idea.
Step 1:Who would be interested in your product? Start with that group of people when thinking about acquisition. Then, think about which channels you would use to reach them. The combination of those two factors is your reachable market.
For each of your channels, you'll need a specific metric for measurement.
The template will help you track your progress in acquiring customers through SEO and paid ads. You can measure success by looking at how many consumers visit your site and how long they stay.
Step 2: What do you need to do to turn active users into qualified leads? During the Activation phase, think about the product or experience you want to deliver for your customer. What needs to happen for a prospect to become a customer?
Here are some of the metrics you can use in your AARRR template to measure Activation:
- Spending time on your website or app.
- Visiting additional pages on your website.
- Signing up for your newsletter.
- Signing up for a free trial of your product or service.
- Buying your product or service.
Step 3: The Retention phase is when you focus on keeping your customers. Think about ways to encourage them to buy from you again and how to reduce the number of customers that stop using your product or service (customer churn rate).
Your measurements for this phase will track how your retention efforts are performing. Here are a few examples:
- Customers return to your website repeatedly.
- Customers engage with your email marketing (either by opening the email or clicking one of the links).
- Customers engage with your social media (either by following your account, liking or commenting on your posts, or sharing your posts with other users).
Step 4: A referral program is a great way to get existing customers to spread the word about your business. You can start by building a marketing strategy that incorporates a referral program.
Take a look at these examples of referral incentives to give you some inspiration:
- Offer a ‘refer a friend’ coupon in your email marketing or when a customer makes a purchase.
- Host referral contests on social media.
- When new customers make a purchase, ask how they heard about you. Have ‘recommendation from a friend or family member’ as an option to choose from.
There are various options available for tracking referrals, which depend on the marketing channels and activities being used.
Step 5:If you want to generate revenue, you need to start by calculating whether your business model is sustainable and how you should price your goods or services. Make sure that your efforts are actually increasing your revenue. If they're not, you need to come up with some new ideas.
Use the SMART goals framework to ensure your revenue metrics are effective. This framework will ensure that all your measurements are detailed, achievable, and realistic.
