Sustainable, long-term growth and pirate metrics go hand in hand. The first question you’ll want an answer to is, “What are pirate metrics?” The second will be why are so many seemingly sensible marketing professionals shouting AARRR?
Fear not marketing swashbucklers. This article explains pirate metrics and the AARRR acronym. You’ll then learn how pirate metrics align with a typical buyer journey and what KPIs you can use to track specific metrics.
- How can you optimize your campaigns to make the most of pirate metrics?
- Ways you can implement pirate metrics into your business
What are Pirate Metrics?
You’re not going mad. Speak like a pirate day hasn’t spread. Pirate metrics are a genuine marketing term, and the AARRR acronym is a legitimate and beneficial term to get to know. AARRR refers to the most valuable metrics to businesses that value growth. They are a way of tracking and quantifying how much a business is developing and expanding. Broken down into its constituent parts, pirate metrics are:
Pirate Metrics and the Buyer Journey
Imagine a typical sales funnel divided into five sections. You can align the Acquisition part of the pirate metrics at the top of the funnel, where the awareness stage typically sits. The remaining metrics go in order, alongside each step, until you reach the bottom of the funnel. The bottom is where your loyal customers reside. Here, you can attach Referral metrics.
Pirate metrics monitor and track each step of the customer or buyer journey. They give you quantifiable, actionable data that you can use to track and facilitate growth. Your marketing and sales teams can better understand their campaigns with this data. They can then adapt and optimize to achieve even better results.
AARRR metrics were coined by an entrepreneur called Dave McClure. McClure is something of a business powerhouse. He is a private investor and co-founded venture fund and seed accelerator 500 Startups. He first described AARRR metrics during his presentation at the Seattle Ignite Summit.
Based on years of experience, Dave understood the information a business needs to grow. He boiled it down to these five sets of metrics and counseled that all businesses, especially startups, should focus on them.
Pirate Metrics: Acquisition
We find ourselves right at the top of our funnel. This is where we find and acquire new customers. It’s where many businesses dedicate the majority of their resources. That’s unsurprising. Many businesses see marketing and sales as a numbers game. The more people enter the top of your funnel, the more reach the bottom. To an extent, that’s true, but it’s not just about volume. Quality matters, too.
The acquisition set of metrics considers all of your lead-generation ideas and efforts. That means outbound campaigns, email marketing, SEO, and social media. In this stage, you want to instigate valuable and meaningful connections with your audience. You want to focus on those likely to convert into buyers rather than trying to connect with as many people as possible.
Acquisition metrics include:
- Click-Through Rate (CTR): The measure (as a percentage) of how many people click on your ad once they have seen it.
- Organic Traffic: A measure of how many people visit your website from search engines such as Google.
- Conversion Rate: The rate at which your team converts leads into customers.
- Cost per Acquisition: A measure of how much it costs you to acquire one new customer.
- Engagement Rates: Assess how many likes, shares, comments, and other interactions your content marketing receives.
- Open Rates: Linked to your email marketing campaigns, this is the percentage of recipients that open your email.
Pirate Metrics: Activation
A step below acquisition is activation. Your audience and potential customers have gotten to know your business and are now taking a genuine interest. The last stage and set of metrics was all about grabbing the audience’s attention. The activation stage is about keeping hold of it. Here, your team needs to deliver the best possible service and, crucially, give the new customer a fantastic first experience.
Many believe this stage is dedicated to measuring the number of signups or onboarded customers. That’s certainly part of it, but it’s also about how those customers engage with your offering.
The metrics themselves relate to both onboarding and engagement during the initial stages. Your business should be interested in these metrics because they influence the rest of the user’s journey. They set the sentiment and tone for that customer. Give them a great experience, and they’ll feel great about using your product. A bad onboarding, on the other hand, leaves a sour taste and an ongoing experience to match.
Activation metrics include:
- Onboarding Success Rate: The measure of how well a customer is onboarded with your product and services.
- Time to First Value (TTFV): The time it takes for a customer to derive genuine value from your product or service.
- Initial Engagement Rate: The rate at which a customer engages with your product or service following onboarding.
- Customer Satisfaction Score: A selection of customer feedback at this early stage.
Pirate Metrics: Retention
If the above two stages are about finding and bringing onboard new customers, the retention set of metrics is all about keeping them. When a customer reaches this stage, you have established a relationship with them. Now, you deepen this relationship and ensure they feel valued and receive value from your offering. You don’t just want one-time purchase customers. That’s an expensive way of doing business. You want customers who return time and time again.
The retention metrics aim to quantify consumer behavior over a more extended period. They look to help your team recognize patterns so that they can maintain a loyal set of customers.
Retention metrics include:
- Churn Rate: The rate at which previously subscribed customers cancel their subscriptions. The lower the rate, the higher the number of retained customers you have.
- Lifetime Value (LTV): This measures how much a typical customer is worth to your business over their lifetime with you.
- Repeat Purchase Ratio: The amount of customers that have purchased from your business more than once.
- Net Promoter Score (NPS): NPS measures how likely a customer is to recommend your products and services.
Pirate Metrics: Revenue
Revenue is what keeps a business going. No revenue, no business. A business needs to track, monitor, and grow revenue sustainably. A delicate balance needs to be achieved here. The business has to show that the value it delivers is increasing so that the customer is willing to spend more.
The metrics are a measure of the financial health of the business. Hemorrhaging revenue is a bad sign for any business, and these metrics help you to catch early warning indicators. Plus, they’ll help you to celebrate success.
Revenue metrics include:
- Lifetime Value vs. Customer Acquisition Cost: We take two metrics from previous stages and create a new measure. This better indicates how much revenue a customer gives to a business.
- Monthly Recurring Revenue (MRR): The measure of how much revenue a business expects to make from existing customers. For a better indication, deduct any costs.
- Revenue Churn: Linked to Churn Rate, this is how much revenue is lost due to customer churn.
- Upsell and Cross-sell Rates: The rates at which your team can gain more revenue from existing customers. This is achieved by upgrading their packages or offering other products.
Pirate Metrics: Referral
At the bottom of our funnel and the “end” of the customer journey lies referral. These are your most dedicated and loyal customers. The customers who are in love with your products and services. Here, your team aims to encourage your most loyal customers to promote your products and services on your behalf. You want them to shout your brand’s name from the rooftops and attract more customers.
Referral metrics include:
- Net Promoter Score (NPS): NPS features again here. The higher the score, the more likely they are to recommend your business.
- Referral Rate: The number of customers you gain through referrals.
- Referral Participation Rate: If you’re running a referral program, the measure of how many of your customers participate in it.
There’s more to pirate metrics than loudly shouting AARRR and hoping for business growth. When tracked, monitored, and acted upon, these metrics can shape your business’s development and expansion. They are opportunities for betterment. Ignore them, and you’re bound to be leaving treasure on the table.
- There are specific metrics to help you measure success at every stage of the buyer journey.
- Tracking these metrics allows you to explore patterns and act on issues quickly.
- Don’t fall into the trap of focusing exclusively on acquisition. Tempting as that might be.