- stands for Acquisition, Activation, Retention, Referral, Revenue
- metrics to understand users’ behavior
- used for customers’ journey optimization and goal setting
Acquisition focuses on the marketing channels you use to tell about the product.
Answers the question: Through what channels will people find out about the product?
Examples: SEO, ads, social media.
Activation focuses on the first actions you wish people to take when they encounter the product.
Answers the question: What percentage of the visitors falls into leads?
Examples: sign-up, booking a demo, downloading booklets.
Retention focuses on people coming back repeatedly and using the product.
Answers the question: What percentage of the leads falls into regular users?
Examples: web sessions, opening emails, returning to the blog.
Referral focuses on people spreading the word about the product.
Answers the question: Do users like the product enough to tell others?
Examples: sharing links, SM reposts, word of mouth.
Revenue focuses on the money you make from turning leads into paying customers.
Answers the question: Do you successfully monetize these behaviors?
Examples: minimum revenue, break-even revenue, revenue exceeding CAC.
Step 1: Identify the AARRR metrics for your product.
Step 2: Set up tools for collecting the data.
Step 3: Analyze the data to understand what stages of user behavior must be improved.
Step 4: Think about how you improve them and plan further actions.
Why Prioritize with AARRR
It is critical to analyze and understand users’ behavior. But presuming, you’ve gathered the data and decided on one or two metrics you need to increase. In what order will you implement the tasks from the backlog for better results?
Improving a metric requires commitment. You want to be sure every issue your team solves impacts it positively. And you want to impact it faster at the lowest cost. That’s when AARRR becomes your prioritization framework.
How to Prioritize with AARRR
1. Transform Metrics into Scorecard Criteria
Think of the metrics as questions a task or idea must answer to understand its influence.
E.g., How the solution increases the number of people:
- attracted to the website/app? (acquisition)
- registered/installed the app? (activation)
- using the product regularly? (retention)
- eager to tell others about the product? (referral)
- paying for the product? (revenue)
These generalized examples are great for a start. Specify the questions and descriptions later when you see these don’t fit. Don’t waste time trying to come up with ideal questions straight away.
2. Decide on Scope for Prioritization
AARRR is a marketing framework. We use it for prioritizing features as well. You can use it for both—divide the issues into scopes and clarify the criteria descriptions. We use two different boards to prioritize features and marketing activities. Each of them has a few adjusted AARRR criteria.
For estimating stories and tasks, we use Activation, Retention, and Revenue with these descriptions:
- Activation—Solves onboarding problems; Customer gets the value faster; Helps to understand how it works.
- Retention—Helps to sustain usage frequency. The evaluation must be regular. Helps teams to evaluate on time. It’s important to remind users how many issues they need to evaluate.
- Revenue—Helps to sell. Easier to make a demo. Customers understand the value. Customers don’t want to buy without it.
We also have Reach, Effort, and two product-specific criteria—Speed and Collaboration.
Marketing Activities Prioritization
For estimating marketing efforts, we use two criteria from AARRR:
- Acquisition—How much traffic to the landing page expected?
3—500-1000 and higher
- Activation—How many conversions expected?
2—about a dozen
3—dozens and more
We also use the Effort, Price, and Analytics criteria.
3. Distribute Criteria Weights
AARRR metrics should be improved equally. You can’t spend all your time enhancing retention only. You’ll have nobody to retain because acquisition and activation weren’t working.
At the same time, you can’t allow a substantial decline in one of the metrics and may require precise concentration. Growth means constant zooming in and out.
So, AARRR criteria should be of equal value and have the same weights most of the time. And when some of them require more team investments, increase their weights. Thus tasks influencing the needed metrics skyrocket to the top of priorities.
4. Add Effort Criteria
There is one vital point missing in AARRR—it doesn’t take into account costs. Increasing your key metrics is important, but you can’t afford to neglect the price. To grow faster, you want to find quick wins. Decide on effort criteria (e.g., development complexity or promotion cost) and add them with negative weight to highlight the cheapest and most valuable solutions.
5. Choose Scores
Decide on the numbers to use for estimation. Fibonacci or Exponential are great sequences to use. We use the 0—3 range. The numbers are not that important as how you explain them. Add score descriptions to facilitate the estimation. We’ve added MoSCoW as score descriptions to our AARRR template:
- 0 - won’t impact
- 1 - can impact
- 2 - should impact
- 3 - must impact
You can also use the exact numbers as you saw in the description of Acquisition and Activation in the 2nd step.
6. Evaluate Asynchronously
Involving your team enhances the prioritization greatly. Together you estimate more accurately and build team clarity.
- Divide the criteria among the teammates who are best at evaluating them. Collect all opinions, regardless of a newbie or an expert—their average score is the most accurate estimation you ever get.
- Estimate independently, out of the meeting room. Average estimation is precise when people don’t deliberate. Try to preserve unique visions. Don’t emulate each other’s thoughts—don’t discuss possible scores before you’ve assigned them.
- AARRR funnel is for analyzing users’ behavior and goal setting.
- Use AARRR as prioritization criteria to make sure you remain focused.
- Use criteria weights to control your focus.
- Consider efforts and expenses.
- Customize criteria descriptions and add score explanations to them.
- Use templates to minimize the time spent on setting the framework up.