AARRRgh! The AARRR Framework and the Sales Funnelgrowthbuffs
Former PayPal Marketing Director Dave McClure leveraged on a pirate joke to coin an important acronym in the domain of growth hacking i.e. AARRR, which stands for Acquisition, Activation, Retention, Referral, and Revenue.
The AARRR framework is often depicted as analogous to a sales funnel – like a funnel, growth hacking techniques should guide the visitor towards a particular objective. It captures the various stages, right from acquiring a visitor to converting the visitor into a paying customer as shown below.
To put simply, a visitor may be acquired through social media or paid advertising. Activation could be the first positive or happy experience of the visitor with your product or business, for instance creating an account on your website thereby turning the visitor into a member. The member is retained and becomes a user if he/she comes back to interact again with your product/business regularly. The stage of referral is attained when the user likes your product enough to refer it to others. Revenue generation is realised when the user conducts monetized behavior using your product for instance, by buying the product or clicking on affiliate links.
How do you use the sales funnel?
A good starting point is to track your conversion rate at each stage of AARRR. As an illustration, in a given month, you might get 100 visitors, activate 20 members and retain 2 users. In this scenario, your monthly conversion rate for activation and retention would be 20% (20 out of 100) and 10% (2 out of 20) respectively.
You also need to identify the area of the funnel that gives you the maximum return on investment of time, effort and cost and focus your growth hacking strategies to target that area consistently.
We will explore these ideas in more detail in our subsequent posts.
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