Growing a business takes both passion and strategic thinking. When your whole team is energized about building a new product, it drives innovation and momentum. But without a clear plan, it’s easy to lose sight of the big picture.
The right marketing framework channels that creative energy into long-term success by setting clear expectations and strengthening internal alignment. AARRR metrics encourage teams to focus on work that directly contributes to growth.
Here’s how to use the AARRR model and how it can support your goals.
What are AARRR metrics?
AARRR is a marketing framework designed to help you track and optimize five stages, sometimes referred to as a funnel, in the user life cycle to achieve growth. These stages are represented by the abbreviation AARRR, which stands for:
- Acquisition
- Activation
- Retention
- Referral
- Revenue
People sometimes refer to this model as pirate metrics because the abbreviation resembles the sound a comical pirate makes.
Tracking and reviewing AARRR metrics can help businesses find weak spots in the marketing funnel. If data reveals users drop off during a specific phase, it might indicate a problem with the experience. Businesses use this data to focus their efforts and resolve issues inhibiting growth.
A brief history of AARRR
Entrepreneur and investor Dave McClure invented the AARRR model in the early 2000s, with the idea that these metrics measured key aspects of organizational health. Using this framework can ensure your team is measuring what matters and planning for big-picture success. It helps avoid the trap of focusing on vanity metrics—superficial metrics that seem impressive but don’t always translate to growth. Examples of vanity metrics are social media video views and total email subscribers.
McClure developed AARRR metrics with product-led technology companies in mind. The model’s emphasis on growth makes it a good fit for ambitious startup companies. Established ecommerce retailers, B2B brands, and other types of businesses can all use AARRR metrics to support their product development and marketing initiatives. Reviewing the AARRR framework during the planning phase helps team members envision how new initiatives guide users through each phase of the customer life cycle.
Some businesses use the RARRA framework, which references the same five user behavior metrics in a different order: retention, activation, referral, revenue, and acquisition. This modification shifts the focus, prioritizing current customer satisfaction over acquisition.
Stages of the AARRR framework
The AARRR framework breaks the customer journey into five distinct stages, sometimes described as a funnel. To use the framework, businesses identify specific metrics, or key performance indicators (KPIs), for each stage.
Choosing the right KPIs is essential for effective AARRR implementation. The most useful measurements vary depending on your industry, business model, and product. Identifying the right metrics involves reviewing the AARRR framework and considering how each phase supports your overall business goals. Here’s more about each stage of the AARRR funnel and common metrics:
Acquisition
Acquisition is the point at which a user enters your sales pipeline. They might not be a paying customer yet, but they’re on the path toward conversion. Customer acquisition metrics reveal how new users discover your product and which channels are generating the most leads.
Acquisition metrics vary based on industry and active channels. Potential activation channels include paid advertising, brand partnerships, content marketing, and direct outreach. Common measurements include the number of leads generated, new accounts created, and ad clicks.
Activation
Activation is the tipping point—the moment when casual viewers become customers. The exact definition of an activated user varies from company to company. A software-as-a-service (SaaS) business, for example, might track how many users fill out their profile once they create an account. If account creation is the acquisition point, profile completion is a meaningful next step that signals engagement. For an ecommerce company, on the other hand, the first purchase might be a more useful activation metric.
Activation metrics can reveal whether users understand your product’s value. To assess activation, determine an action or set of user behaviors signaling significant interest, then track how long it takes consumers to reach this point.
Common activation metrics include engagement indicators, such as time on page and pages per session, in addition to actions like newsletter signups and app downloads. You may also track the percentage of users who reach this stage (activation rate).
Retention
Retaining a customer means keeping them engaged after the activation point. Attracting and nurturing new customers can be time-consuming and costly. Investing in user retention can help you get the most value out of your marketing and acquisition spend and support sustainable growth.
Customer retention metrics measure sustained interest, with a high customer retention rate indicating a positive customer experience. Common metrics include daily active users, customer churn rate, monthly recurring revenue, and customer lifetime value (CLV).
Referral
Referral metrics reveal how effectively a company leverages its existing user base to attract new customers. Strong referral rates are a positive indicator of customer satisfaction—happy users are more likely to recommend a product.
Businesses with official referral programs can track metrics like the number of referral codes generated, how many users become referrers, and the percentage of code recipients who complete the onboarding process. Calculating a Net Promoter Score (NPS) helps you understand how likely your current users are to become referrers.
Revenue
You can’t succeed without generating revenue. Reviewing revenue metrics helps you evaluate monetization strategies and chart a plan for financial health. Common revenue metrics include average revenue per user (ARPU), monthly recurring revenue (MRR), and net dollar retention (NDR), also known as net revenue retention (NRR).
In addition to these metrics, businesses often calculate an average cost per acquisition (CPA)—how much it costs to attract a new customer. Comparing CPA to ARPU and customer lifetime value can reveal whether you’re on the path to profitability.
Limitations of the AARRR framework
The AARRR model excels at identifying weak spots in the customer journey, but it might not be the best fit for some ecommerce companies or for evaluating brand-building efforts. Here are the limitations of the AARRR framework:
Oversimplifies the customer journey
The AARRR framework risks oversimplifying the customer journey, assuming consumers complete each stage of the funnel sequentially. In reality, users may skip stages or complete actions associated with different stages simultaneously.
Requires advanced data collection
Working with the AARRR framework requires developing and tracking a set of metrics for each stage of the customer journey. Collecting this data may be technically complicated if you’re looking to track custom metrics like time to activation.
Additionally, the AARRR framework emphasizes quantitative data and growth. It doesn’t account for qualitative aspects of brand building and customer satisfaction, like user feedback, brand awareness, and customer sentiment—all of which require advanced reporting tools to track.
Prioritizes tech businesses
Entrepreneur Dave McClure designed AARRR with SaaS companies in mind. The AARRR funnel, therefore, mimics the customer life cycle for digital product users. This structure might not map intuitively onto the customer journey for other types of businesses. Some stages, such as referral, don’t always apply to ecommerce or B2B businesses. Companies may need to tweak the framework to suit their needs.
AARRR metrics FAQ
What are AARRR metrics?
AARRR metrics, also known as pirate metrics, make up a marketing framework for growth-oriented businesses. AARRR stands for acquisition, activation, retention, referral, and revenue—the critical indicators of organizational health.
Why is AARRR called pirate metrics?
People sometimes refer to the AARRR framework as pirate metrics because the abbreviation, when pronounced, resembles the sound of a comical pirate.
How do you use the AARRR framework?
Businesses use the AARRR (pirate metrics) framework to plan new initiatives and track success. This approach involves identifying metrics associated with each stage of the AARRR funnel (acquisition, activation, retention, referral, and revenue). It assesses how products guide consumers through the different phases. Use this data to spot drop-off points and adjust processes accordingly.
