What to do first for optimizing product growth funnel.
AARRR score = A(Score x Weight) + A(S x W) + R(S x W) + R(S x W) + R(S x W) - Effort (score x weight)
Metrics for optimizing funnel of product growth.
A priority matrix is a management tool for determining the development vector where priorities are visually divided into four (or more) quadrants.
There are matrices for personal time management and complex business projects. Most of them have derived from the Eisenhower matrix created to manage personal tasks.
Use an action priority matrix when you have limited resources and you want to distribute them rationally to maximize performance and ROI.
Placing backlog tasks into four quadrants will help you visualize their impact on the main business objectives. Focus the team efforts on one of the four quadrants to have a clear understanding of where you’re heading, what results, and when to expect.
One of the most efficient and easy to use is the 2x2 matrix. It consists of two evaluation criteria: one positive (e.g., Value, Impact, or Revenue) and one negative(e.g., Effort, Costs, or Risk).
Tasks evaluated by the criteria are divided into four quadrants:
Do you have deadlines, and time is critical? Or you must avoid risks at all costs?
Two criteria are enough for a fast and simple prioritization. Yet, they aren’t enough for complex projects where you must consider and juggle multiple stages of user behavior or business objectives. We in Ducalis.io estimate all the vital elements for our product and just filter the matrix by the criteria we need more focus on at some point in time.
What numbers will your team use when estimating the criteria?
Each criterion should be evaluated by the same numbers with prescribed interpretation. We use numbers from 0 to 3 where 0—no impact, 1—low impact, 2—medium impact, 3—high impact.
Who takes part in the project and can bring a unique perspective to the table? Does the project require only engineers or designers and copywriters’ efforts as well?
Considering each task by the whole team strengthens your shared understanding and gives the best prioritization results. In our team, managers evaluate feature Reach and Revenue, engineers and UX/UI—Development Time, and everybody must estimate Activation, Retention, and two product-specific criteria, Speed and Collaboration.
Why have these features made it to the top? Do you all agree they are most valuable now and must be implemented?
Never take the prioritization result into work unquestioningly. Prioritization is a tool to help you make the right decisions and not make them instead of you. Discuss your top priorities with the team at the planning meeting and make sure you all understand what must be done, why this way, and why it’s important.
A priority matrix is simple and efficient. You can make it far more powerful by using automation tools. Ducalis.io allows you to create a complex prioritization framework you can use both as a weighted decision matrix and action priority matrix and switch the criteria focus in no time.
Try our matrix templates. Free to sign up and free to use. No credit cards. Just jump in and prioritize for your growth.
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.
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.
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:
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.
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:
We also have Reach, Effort, and two product-specific criteria—Speed and Collaboration.
For estimating marketing efforts, we use two criteria from AARRR:
We also use the Effort, Price, and Analytics criteria.
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.
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.
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. You’ll find geometric sequence in our AARRR template:
You can also use the exact numbers as you saw in the description of Acquisition and Activation in the 2nd step.
Involving your team enhances the prioritization greatly. Together you estimate more accurately and build team clarity.