Ever heard about the pirate metrics or AARRR and didn’t know what it means? Do you know the five of the most important metrics for your digital marketing efforts? If not, don’t worry. You’re not alone. Many business owners and marketers struggle to determine which KPIs they should be tracking. That’s where the “Pirate Metrics” come in. In this blog post, we will discuss what AARRR stands for and how it can help you track the success of your digital marketing campaigns.
What are the Pirate Metrics?
Dave McClure, the founder of 500 Startups, coined the term “Pirate Metrics” back in 2007. AARRR stands for acquisition, activation, retention, referral, and revenue. These five metrics help startups think through the most important aspects of their business. Let’s take a closer look at each one.
How are you acquiring new customers or users? This metric measures the effectiveness of your acquisition channels, such as paid advertising, organic search, social media, or email marketing.
Once a user has been acquired, how do you get them to take their first important step? This could be signing up for a free trial, making a purchase, or downloading a piece of content. Activating a user is critical to ensuring they stick around and become a valuable customer.
Once a user has been acquired and activated, how do you keep them coming back? This could be through emails, push notifications, or loyalty programs. Ideally, you could get them to subscribe to a newsletter or follow you on social media if you’re sharing exciting things there.
How are users referring others to your product or service? This could be through word-of-mouth marketing or referral codes. This can be either active or passive; you want to make it as easy as possible for users to refer others.
How are you generating revenue? This could be through subscription fees, one-time purchases, or advertising. After all, most companies do business in order to drive revenue and strife. Metrics in this category focus on whether users are actually converting and how much money they’re spending.
Dave McClure at the Foo Camp 2008 (Image: Joi Ito)
Now that we’ve gone over what AARRR stands for, let’s discuss how you can use it to track the success of your digital marketing campaigns.
AARRR: What KPIs to Track for Each Pirate Metric
- Number of new users
- Source of new users (e.g. paid advertising, organic search, social media, email marketing)
- Cost per acquisition (CPA)
- Percentage of users who take the first important step
- Time to first important step
- Percentage of users who come back
- Average number of times users come back
- Number of new users referred by existing users
- Referral conversion rate (percentage of referred users who become customers)
- Revenue generated
- Average revenue per user (ARPU)
- Average order value (AOV)
What does the C stand for in the alternative version of AARRR?
Recently I heard that there is also an “AARRRC” version of the pirate metrics, so what does the C stand for and what sort of pirate would say that instead of AARRR? Tetsuya Takeda shared in an article that the C stands for churn. Churn is the percentage of users who stop using your product or service within a given time period. AARRRC helps startups think through the six most important metrics of their business: acquisition, activation, retention, referral, revenue, and churn, so consider it an extension to the original idea and framework.
Whether you use AARRR or AARRRC to track the success of your digital marketing campaigns, the important thing is to focus on the key metrics that will help you achieve your business goals. If you need help figuring out which metrics to track, contact an experienced digital marketing agency. Even if you don’t hire them for the long term, they can help you set this all up as a project.
AARRR can be a helpful framework for thinking through the key metrics of your business, but it’s not the only one. You can try it out and see how that works for you and your team, but there is never the one golden practice that works for everyone, so feel free to experiment or customize this to fit your needs.
As you can see, the Pirate Metrics can be applied to any business in any industry. Whether you’re a startup or an established company, AARRR can help you track your progress and ensure you’re on the right track. So what are you waiting for? Start tracking your AARRR framework today.
by Christopher Isak