What is AARRR

AARRR is a marketing and product framework based on a conversion funnel. It can be used to manage product growth and improve user experience by streamlining marketing and product processes. The framework helps build a transparent metrics structure for all members of a team and answer important product-related questions.

AARRR stages

1. Acquisition
2. Activation
3. Retention
4. Revenue
5. Referral

The AARRR framework is equally useful for start-ups looking to develop their business models as it is for seasoned companies seeking a better understanding of their user journey with a view to scaling up business or tapping into new markets. The AARRR metrics cover several stages of the customer lifecycle, and each user action has its own KPIs.

Applying AARRR: a mobile game case

Acquisition – the user sees a game ad on social networks and opens an app store.

Activation – the user downloads the game, completes the tutorial, and learns key mechanics.

Retention – the user returns to the game once or twice per day over a four-week period.

Revenue – the user purchases in-game currency.

Referral – the user invites their friend to the game using a referral link to obtain bonuses.

Now let’s look at each of the AARRR stages:

• what questions to ask ourselves at each stage
• what channels and tools to use
• how to use them
• what metrics to look at to assess performance at each stage

Acquisition

Acquisition is the stage where the user learns about the product while the business identifies the audience profile and acquisition channels.

Questions to ask at the Acquisition stage

Key question: Where do the customers come from?

Additional questions:

• What do customers want?
• What motivates customers to address their problems?
• What should customers experience when using the app?
• How can potential customers find the app?
• What is the customer acquisition cost (CAC) in each marketing channel?
• How many customers can you reach through a specific marketing channel?
• Can a specific marketing channel bring in the right customers?

Acquisition channels

• SEO
• PR
• Content marketing
• Email newsletters
• Contextual advertising
• Affiliate marketing

Acquisition tactics

• SEO-optimized content that ranks high in search queries and features eye-catching titles that garner clicks.
• PR announcements of key updates and new tools on social networks or niche media.
• Own media in the form of blogs and social media accounts, with one to three posts a week.
• Contextual and targeted advertising aimed at attracting traffic to the blog or boosting app downloads.
• Email newsletters to leads generated by landing pages where the ads were displayed.
• Ad integration with the platforms of opinion leaders that are popular in your specific field.

Metrics for measuring acquisition 

• Website traffic from each marketing channel.
• SEO metrics:
  • number of new organic users
  • number of organic sessions
  • keyword ranking
  • number of external links
• Advertising:
  • impressions,
  • clicks,
  • campaign cost,
  • cost per click (CPC),
  • cost per install (CPI),
  • click-through rate (CTR),
  • leads.
• SMM metrics:
  • views,
  • shares,
  • subscriber count on social media.
• Bounce rate

Activation

Activation is the stage where the user has an “Aha!” moment and realizes the value of your product after performing a certain action. This moment determines whether the customer gets drawn to your product or walks away from it.

Questions to ask at the Activation stage

Key question: How do interested customers become active?

Additional questions:

• What does 'activation' look like for my service?
• How quickly can customers find value in the app?
• What do customers value most in the app?
• What is the ideal customer journey for this product?
• How can the customer experience be improved?

Activation channels

• Content marketing
• Trial access or a free demo
• Newsletter subscription
• Onboarding
• Subscription to push notifications
• Subscription to the company's official social media accounts

Activation tactics 

• A range of product-related articles, training videos and guides to educate users about the product.
• A technical manual or a knowledge base to help users understand the product.
• Onboarding to provide a better product experience.
• 1-month free trial.
• Push notifications for users who downloaded, but never opened, the app.
• Subscription links to the company’s social media pages given on its official website or at the end of blog posts.

Metrics for measuring activation

• Own metrics to gauge the activation rate specifically for your product. For example:
  • The user performed X key actions over N days.
  • A specific feature was used X times.
• Time to value – period of time from sign-up to the “Aha!” moment.
• Conversion rate – share of successful conversions (to sign-up, onboarding completion or any other key action with your product).
• Drop-off rate – number of users who left the conversion process without completing it.
• CPAU – cost per active user.
• Engagement rate – session length and depth.
• MAU, WAU and DAU – number of monthly, weekly and daily active users.

Retention

Retention is the stage where you need to encourage users to return to the app and perform certain actions. Retention of potential customers requires an individual approach, so segmentation and personalization are key here.

• To reduce churn, we need to understand why the customers who had previously used the product stopped doing so.
• To pre-empt churn, we need to make content and offers as personalized as possible.

Questions to ask at the Retention stage

Key question: How to retain an interested customer?

Additional questions:

• What does retention mean for my service?
• How long do customers use the app for?
• What do customers value the most?
• How long do customers remain active for?

Retention channels

• Email newsletters
• Push notifications
• Personalized offers
• Social networks
• Retargeting

Retention tactics 

• Newsletters describing improvements to and new uses of features already familiar to the customer.
• Audience segmentation with tailored content and personalized offers by segment.
• Announcements of upcoming events on social media (webinars, conferences, promos, etc.).
• Trivia quizzes, contests, and themed (e.g., seasonal) campaigns.
• Retargeting existing users who haven’t been active in X months.

Metrics for measuring retention

• Retention rate – how many users return to the product over a certain period of time. Optimal performance varies by product: for a social media network, it may be several times a day, whereas a flight-booking service would be happy with customers returning once every few months.
• Churn rate – how many users abandon the product over a certain period (e.g., a month) – and its forecast.
• Email open rate – the share of users who opened the newsletter vs the total number of users who received it.
• RSS feed sign-ups – number of users who subscribed to the company’s blogs on third-party platforms, such as vc.ru or medium.com.

Revenue

At this stage, customers make a purchase, and it is a key yardstick by which a product's effectiveness from a business perspective is measured.

Questions to ask at the Revenue stage

Key question: How to convert a user into a paying customer?

Additional questions:

• How many users convert into payers?
• What is the average ticket per paying user?
• How many users make repeat purchases, and how often?

Revenue channels and tools 

• Customer support
• Content to encourage purchases
• Special offers and discounts
• Upselling and cross-selling: techniques for selling additional products and services

Revenue tactics 

• Discounts for the first month or year of using the product.
• For paying customers – lower prices for upgrades or cross-functionalities.
• Push notifications to remind users of free version limitations and nudge them to upgrade to the paid one.
• Segmenting the audience and offering different segments personalized content and promotions.
• Steering undecided prospects towards your product by highlighting how your value proposition beats that of your competition.

Metrics for measuring revenue

1. ROI – return on investment in product development.
2. ARPU/ARPPU – average revenue per user / per paying user.
3. LTV – lifetime value, i.e. revenue generated over the entire time the customer uses a product or service.
4. CAC – customer acquisition cost.
5. AOV – average order value, calculated as revenue divided by number of transactions over a certain period.
6. Revenue.
7. Paying users.

Referral

At this stage, news of the product is spread through word of mouth.

Questions to ask at the Referral stage

Key question: How to encourage customer referrals?

Additional questions:

• What do customers enjoy most about the app?
• At which stage are users most likely to refer friends?
• What incentives are needed for customers to invite their friends?

Referral channels and tools

1. Reviews;
2. Brand advocates;
3. Referral programs;
4. Share buttons.

Referral tactics 

1. Review requests via email.
2. Rewards for recommendations.
3. A referral program rewarding customers for each lead.
4. Share buttons in your owned media (blog, social media page, etc.).
5. Nurturing brand advocates: interacting with users who write positive reviews, setting up closed chat groups for loyal customers.

Metrics for measuring referrals

1. Percentage of users who referred their friends.
2. Percentage of users acquired through referral links.
3. Percentage of purchases by referred users.
4. K-factor – how many new users each existing user introduces to your app.
5. NPS – net promoter score.

To sum up

The AARRR framework is about analyzing steps, needs and changes at every stage of the customer journey, which is a great way to ensure sustainable and manageable growth of a business.

These stages do not exist in a vacuum, meaning each new stage should build on the results of the previous one. Retention cannot be viewed in isolation from acquisition and activation, whose metrics still need to be given proper attention. However, tracking every last metric is hard, and it would be best to relegate that job to an analytics system such as MyTracker.