Entrepreneur and start-up guru the pirate/AARRR framework to help businesses achieve data-driven growth. AARRR stands for acquisition, activation, retention, revenue and referral. Optimizing these five steps will help you understand your customers’ journey and thus grow your business.
- User sees a Facebook ad.
- Clicks on the ad, lands on the website, browses the products but doesn’t buy anything.
- Gets a remarketing ad suggesting newsletter signup for special offers a few days later.
- Clicks on ad and signs up for the newsletter.
- After the 3rd mail goes back to your website and buys the product.
Optimize your channels
- Which channel is driving the most traffic to your website?
- What channel converts best?
- Can you find the lowest acquisition and conversion cost per channel?
Experiments tell you what activates your users.
- What’s the best way to make sure users understand your product as fast as possible?
- Which factors must be given in order to guarantee a positive user experience?
- How can I set up my tracking to find these factors?
You could start by reading negative reviews and comments or use surveys to do so. If a high number of people try your product but 99% churn, the problem lies with your product.
It’s all about trust.
- How many of people that converted use you product regularly?
- What is your churn rate and what’s causing it?
- Using your findings, what can you do to improve customer retention?
CLV = (Annual revenue per customer * Customer relationship in years) – Customer acquisition cost
CAC = (Total Marketing + Sales Expenses) / Number of New Customers Acquired
- What is your average customer lifetime value and how can you improve it?
- What is your average customer acquisition cost per marketing channel?
- How can you optimize the channels that work well?
- Do your customers like your product enough to refer it to their friends?
- If yes, how can you provide a lucrative incentive to motivate your users to refer you?
- If they are not referring your product although you have referral in place, what could be the reason?
This is just the tip of the iceberg. The truth is, there is no magic formula that works for everybody.
If this article was helpful to you, you check out our online marketing consulting and training services and learn how you can take your online marketing to the next level.
This article is also available on medium.com