Regardless of a small startup or long-living product—we all want to grow and scale-up. Even the brightest idea with a whole load of value will slowly fade away if a wrong path is chosen. You have to plan strategies, measure performances, and check your direction. But most importantly—you have to focus.
Dave McClure presented the AARRR funnel, aiming to help new businesses narrow their focus. The model is still widely used and became a startup standard for over 13 years. In this article, we want to revisit AARRR and look at it from a different angle.
AARRR Framework Definition
AARRR is a set of metrics used for understanding and optimizing users’ behavior. AARRR stands for acquisition, activation, retention, referral, and revenue.
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.
AARRR Original Usage
To apply AARRR to your product, you need to follow these steps. They are actionable, straightforward, and will help you focus on essentials without wasting time.
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 be able to analyze and understand users’ behavior. Your opinion is purely subjective. You can only imagine how people really react to your landing page or whether they find this or that feature convenient.
But presuming you’ve gathered the data and decided on one or two metrics you need to increase. How exactly are you going to pick the tasks from the backlog?
It’s not a one-time action. Improving even a single metric is long, challenging, and requires commitment. If you need to level up retention, you want to be sure that every issue your team solves will positively impact retention. It’s a waste of time to do the tasks affecting acquisition if it’s not what you require right now. And this is when AARRR becomes your prioritization framework.
Who and What is AARRR Prioritization for
AARRR funnel can be used by both startups and big companies but with different approaches.
If you are small, use acquisition, activation, retention, referral, and revenue as criteria through which you filter all your ideas and tasks. Create one evaluation board and monitor everything together. In startups, teams mostly do whatever they can so competition for time is high. The distinction between product and marketing blurs—you can activate or retain users with both content newsletters and product notifications. So you want to involve the whole team and decide which of the solutions will work best. AARRR is a powerful growth framework and it’s important to use it collaboratively at the early stages.
If you are big, you can still use AARRR but at a bigger scale—use each letter as separate evaluation boards. Even when you have dedicated cross-functional teams for each stage of the user behavior, they still need to prioritize their ideas. Create a board for each team in Ducalis and let them find the most valuable solutions inside their scope of influence. In this way:
- Each team will be able to set their own prioritization criteria that fit their objectives only.
- Anyone in the company will be able to see the top priorities of all teams and sync on the bigger picture of the whole product.
How to Prioritize with AARRR
AARRR is functional both as a stand-alone framework and as complementation. We started to prioritize with the RICE score but pretty soon added AARRR because RICE on its own isn’t enough.
1. Transform AARRR Metrics into Scorecard Criteria
Think of them as questions you will ask each time to understand what the feature or task influences. For instance:
- Acquisition—Will this solution increase the number of people we attract to the website/app?
- Activation—Will this solution increase the number of people who register/install the app/book a demo?
- Retention—Will this solution increase the number of people who regularly use the product?
- Referral—Will this solution increase the number of people who are eager to tell others about the product?
- Revenue—Will this solution increase the number of people who pay for product usage?
These are generalized examples and we strongly recommend you to put more specific questions and additional description. But if you’re not sure yet how to match them to your product, these are great for a start. You can apply the AARRR template in Ducalis with the ready-made descriptions and use them as they are or customize.
2. Decide on What You Will Prioritize
Generally, AARRR is for measuring your marketing efforts. We also use AARRR for prioritizing feature development. You can use it for both, but you may need to divide the issues by the specificity and clarify the criteria descriptions. In Ducalis, we use two different boards for evaluating feature development tasks and marketing issues. Each of them has some adjusted AARRR criteria.
For estimating feature ideas and product tasks we use Activation, Retention, and Revenue. In this case they have these descriptions:
- Activation—Solves onboarding problems; Customer gets the value faster; Helps to understand how it works.
- Retention—Helps to sustain usage frequency. 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.
Here we also have two criteria from RICE—Reach and Effort, and two criteria specific for our product—Speed and Collaboration. In Ducalis you can pick criteria from different framework templates and create your custom criteria.
Marketing Issues Prioritization
For estimating marketing efforts we use two criteria from AARRR—Acquisition and Activation.
- Acquisition—How much traffic to the landing page can we expect from the initiative?
0—No traffic. Task with another purpose.
3—500-1000 and higher
- Activation—How many conversions can we expect from the initiative?
0—No conversions. Task with another purpose.
2—about a dozen
3—dozens and more
In this board, we use the RICE’s Effort and custom Analytics and Promotion Price criteria as well.
Content ideas we prioritize separately. Read this article to find out how we do that.
3. Choosing the Focus
Focus is not about limitations or belittling perspectives. It is about the ability to control all the essential factors. If you want to scale, you have to break down all your ideas and tasks into five AARRR metrics and manage their improvements simultaneously. You can’t spend all your time enhancing retention only. You will end up with having 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. It’s controlling everything while tackling subtleties.
For the most part, you want Acquisitions, Activation, Retention, Referral, and Revenue to be of equal value and have the same weight. And then, when you see that one of them requires more team investments, you increase its weight. Thus tasks with more influence on that metric will skyrocket in the priority list.
You can play with weights in Ducalis and see how the list of your top priorities changes.
4. Highlight the Quick Wins
There is one vital point missing in AARRR—it doesn’t take into account the team’s efforts. Increasing your key metrics is important but you should never forget how much it will cost. Our budgets are not limitless and effort can be by far the most essential part of the prioritization process. To grow faster, you want to find quick wins. Add to the framework a restricting criterion to highlight the cheapest and most valuable solutions.
Add Effort to AARRR in Ducalis. Decide how you measure it (e.g., development complexity or promotion cost), and give it a negative weight (e.g., -2). You can add several restricting criteria with negative pull.
5. Choose Scores
Finally, decide on numbers you are going to use for estimation. For example, you can use Fibonacci or Exponential sequences. We use the range from 0 to 3. The scores themselves are not that important as how you explain them. Adding what each score means to the criteria description helps to simplify the estimation, make it more solid and fast. We’ve added MoSCoW method to Ducalis 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 point.
6. Find Gaps in Team Alignment
Collaborative prioritization has many advantages. The possibility to see where teams have disagreements and misunderstandings is of the most valuable. After all the teammates have assigned the scores, it’s essential to check how scattered their scores are and then find out why. It may turn out that somebody on a team doesn’t understand the criterion and how exactly it fits the bigger picture. Or vice versa, they may have a unique vision and bring a surprising viewpoint to the discussion.
- AARRR funnel is great for analyzing users’ behavior and knowing where you must focus your efforts.
- You should add AARRR metrics to your prioritization criteria to make sure you remain focused.
- Use criteria weights to zoom in and out.
- You must never forget about efforts and expenses.
- Customize criteria descriptions and add score explanations to them.
- Check if your team understands ideas and criteria clearly.
- Use Ducalis AARRR framework template to minimize the time spent on setting up the prioritization process. Adjusting the template is way easier than creating everything from scratch.
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