Have you been hearing about the AAARRR framework, but don’t know where to start? This guide will walk you through the six steps of this framework for your business.
The AAARRR framework (slash Pirate Funnel) is a simple but effective way to understand how your customers interact with your products and services. You’ll also discover opportunities to improve user engagement. It has been developed by Dave McClure (successful entrepreneur and active investor) in 2007. His reason for making this model was because he wanted to make funnel marketing more easy and accessible for entrepreneurs. He really wanted to proof that funnel marketing and growth hacking doesn’t have to be as difficult as many people tend to think. It’s therefore an easy model to both understand and apply.
But how do design a Pirate Funnel in a proper way? By identifying the key metrics for measuring success in each stage of your company’s lifecycle. This ranges from acquisition (getting users) to activation (making sure they stick around). It helps you to organise your funnel, from visitors all the way to paying customers. The tool is not just for startups. It can be used by any business owner who wants to attract more customers.
What is the main reason for using the model? You’ll discover potential leaks in your funnel. Meaning, you can repair broken parts so you won’t waste your resources on your funnel which is defect. Wasting resources as in losing money, time, and potential revenue. You want to utilise all phases as much as possible. This will lead to more visitors, satisfied customers, and revenue.
STEP 1. Attention: How to get visitors?
This step is all about showing yourself/your product out there. Attention (both organically and paid) is the first step on your path to engagement. That’s with a good reason. Because if your public doesn’t get to see your message, they obviously can’t engage with it and the cycle doesn’t start. The more people that are exposed to your product, the higher the chance that some of them will be interested in what you’re offering and engage with it further down the funnel.
Getting attention for your products and services can happen through many different channels: search engine optimisation (SEO), organic social media posts, and paid advertising on social media platforms like Facebook ads. Your company should have an understanding of all these options so you know where best to spend your marketing dollars depending on what type of business you have.
Things you could measure in this phase are the amount of impressions, visitors, and likes/comments.
In case you don’t put enough attention to this phase, think about it this way. This step lays down the foundation for the rest of your funnel. It showcases your target audiences which potential solutions you’ve got for their pains.
STEP 2. Acquisition: How to convert visitors into potential customers?
Acquisition is your first funnel-kind-of-step because it allows you to collect data like email addresses from users who are interested in your product/service (i.e., leads). These leads will be used later on when they become customers through conversion optimisation and customer retention strategies.
When you are designing your acquisition strategy, you should think about how to reach potential customers and how to get them interested in your product or service. In this step, you need to create a marketing plan for acquiring customers by using the right channels, such as social media or paid ads on Google.
But what to offer them? You could for example offer them a(n) e-book, whitepaper, webinar, micro-learning, online module, or newsletter in exchange for their contact details. This giveaway is an essential part of your marketing plan for acquiring new customers.
Then again, what to measure? Depending on you strategy, you could measure the bounce rate on your landing page (which serves as the bridge between a visitor and a lead). Other things you could measure would be the amount of free or paid downloads. Or when you make use of ads, you could measure the costs per click and total acquisition costs.
STEP 3. Activation: How do I win the trust of potential customers?
Activation is the first step in your customer lifecycle funnel and is critical for increasing user retention. It’s defined as getting users to take their first action with your product or service. This can come in many forms: visiting your website, downloading an app from the App Store, signing up for a newsletter or trial account, etc. The key here is that activation will get users through their initial hurdle and into your product so they can experience its benefits firsthand—allowing them to better understand how it solves their problem—and hopefully develop additional loyalty down the line.
So in short, you convert prospects (potential customers) into active users. You’ll facilitate them in realising the added value of your solution outweighs the price they’ve to pay for it. Usually, this will be done with a trial. That’s a good way of giving prospects the opportunity to experience the value before they pay for it. Be aware, the price they’ve to pay for it isn’t always limited to just money. It could also be their time and efforts, like visiting a platform, downloading an app, and request an intake.
Some examples for resources you could use in this phase, are the intake (whereas you can measure the amount of requests), a trial for a learning environment (whereas you can measure the amount of requested trials or the first usage), or a preview of your book.
If you’re experiencing low engagement rates after performing this analysis (typically less than 20%), then chances are good that there’s some work needed on creating more effective activation tactics that encourage users’ deeper involvement with your brand early on in the process.
STEP 4. Retention: How do I keep delivering value to my customers?
Retention is the process of keeping customers happy and coming back to your product or service. It’s important because it reduces the cost of customer acquisition. Without retention, you have to keep spend money on attracting new customers. According to many studies, it costs up to 10 times more money to acquire a new customer than it does to retain an existing one!
If a company has a high rate of repeat purchases (retention), then they aren’t spending as much money on advertising because their existing customers are generating brand awareness through word-of-mouth marketing.
Resources you could consider for giving expression to this step of the funnel, would be an exclusive Facebook group, customer service, an inner circle app group, exclusive monthly updates, etc. You could measure the engagement, time between the most recent visit, the activity of usage, and much more.
Retention is not only about keeping customers happy; it’s also about providing them with insights into how they can improve their experience using your product or service—and making sure that they know those ways exist for them if they want them. This way, you can ensure that everyone gets exactly what they pay for from you—and nothing less!
STEP 5. Revenue: How can I make (more) money from my (potential) customers?
Revenue is the money you make from your customer. It’s what you get in exchange for the value that you deliver to them. It’s important to mention that it’s not just about increasing profitability. It’s also about building strong customer relationships.
To increase revenue, it’s important to understand what your customers want and how much they are willing to pay for it. You can do this by analysing their behaviour on your website (using Google Analytics), observing their reactions in person or over the phone, and asking questions like “why did you buy this product?” or “why didn’t you buy another one?”
You could measure customer lifetime value (if you for example offer paid subscriptions) or conversion rates (when you’re for example selling coaching trajectories with one-off payments).
STEP 6. Referral: How do I stimulate customers to recommend me to others?
Referral is the sixth and final stage of your pirate funnel. This is when customers refer your product to others and efficiently grow your business because of it. Referrals are a key part of the pirate funnel, as they help you get more people on board with your business way faster. The easiest way to grow your business is by having happy customers who are willing to tell their friends about how great their experience was, which will bring them back in the future.
The invitations doesn’t have to be limited to your existing customers. It could also come from potential customers, warm connections from your network, or affiliate partners.
A metric in this step could be the amount of invitations. This includes both sent invitations (visibility) as well as accepted invitations (newly introduced customers). Another metric could be the viral coefficient. This is about how many new customers a single existing customer generates on average. There are various viral mechanisms which you could build in, like affiliate links, an invitation button, discount vouchers, share buttons, you name it.
There’s no such thing as too many referrals; if one referral leads to two new customers, then those two new customers will also be able to refer more people and so on—it’s an endless cycle that can help you grow exponentially over time!
You now have a complete framework for evaluating the effectiveness of your marketing strategies. You can use it to measure your progress, plan future campaigns and make sure that nothing falls through the cracks. If you want to connect the dots between the different funnel stages and build a powerful integral marketing strategy, I highly recommend you to read my previous article about omnichannel marketing (click here to go to the article).
We hope this has been helpful in filling out your AAARRR Framework. Remember, the most important thing is to take care of your customers and give them what they want!
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