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Pirate Metrics: Acquisition, Activation, Retention, Referral and Revenue (AARRR)

pirate-metricsConfused or overwhelmed by the abundance of analytics data? No need to walk the plank just yet.

For those Web and "digital" professionals who immerse themselves in all things analytics it is often easy to lose sight of what is most important - riches (in whatever form they may come).

The aim might be to dazzle stakeholders with a variety of vanity metrics or esoteric data points, but such information often provides little genuine insight into the user experience or why brands are not more successful.

There is a set of metrics, however, that do provide great and immense clarity into an enterprise's successes and failures. If you are keen on measuring and ultimately optimizing every step of the buyer journey, positioning the brand to grow quickly in terms of customers and profits, strapping on your eye patch is the best way to do it. That is right - it is time to consider the use of Pirate Metrics (AARRR - acquisition, activation, retention, referral and revenue).

AARRR is essentially just an analytics framework to help those responsible for gathering useful insights an opportunity to understand consumers' experience with a company and how that company is doing in terms of engaging them to accomplish their goals. Let's take quick look at what is behind the AARRR acronym and learn more about why these metrics are so important to success.

ACQUISITION: If you're not converting or acquiring new users or customers, your sales funnel (and the succeeding metrics outlined below) won't mean much in the end. Acquisition concentrates on a company's ability to focus on getting new users and as such marketers and advertisers should be very concerned about how their campaigns and initiatives are performing.

ACTIVATION: Just because you have managed to acquire new users does not mean they will forever use the service - particularly if it is a free service or information. Activation is the process of getting them to actually use the product. To improve activation metrics, concentrate on the quality of the onboarding experience.

RETENTION: It is not enough to acquire a user and get them familiar with the platform; companies also need to keep them coming back again and again. It costs more to acquire and activate than to retain so having a means to measure how often users come back, and initiatives in place (such as email or browser notifications) to bring them back, is of paramount importance.

REFERRAL: Assuming you have an amazing product or information and people are using it with regularity, perhaps the best metric to indicate success is how many other people they tell. In years past, the print industry even used what is known as the "pass-along" metric (which often tripled the number of reported views of their publications).

REVENUE: There is no more important metric than revenue. Analysts can talk themselves in circles and show stakeholders any metric they want, but if revenue isn't growing, nothing much else matters - not the volume of acquisitions, not activation, not retention nor referral rate.

With so much data at analysts' disposal it is easy to become overwhelmed and lose sight of what is truly important. Pirate metrics, however, provide a useful framework that can be used to gain great clarity into the performance of digital initiatives from the first touch to the last touch. Keep in mind there are many underlying metrics, but looking at the AARRR metrics (in context) provide a basic but strong understanding of where improvement is possible and opportunities abound for growth.

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