The History of the Pirate Funnel
The Pirate Growth Hacking Funnel otherwise known as the AAARRR is a model by David McClure. He was influenced by the Attention, Interest, Desire, and Action (AIDA) Model.
The AIDA model focused on advertising psychology to analyze offline marketing tools. But, with the rise of websites, a new model was needed to track online marketing tools. McClure’s model is useful in data-driven and online marketing. It is effective in measuring KPIs such as conversion and monitoring transactional processes.
The AAARRR model is a measure of six dimensions. These are:
Awareness – How you are building brand awareness and how effective are the strategies?
Acquisition – Where are you getting website visitors from and how much do they cost?
Activation – Measures the degree of positive experiences. It measures how effective this has been at turning visitors into users or purchasers.
Retention – What is the likelihood of users coming back, how often will they be using the service or product? What is the churn rate?
Revenue – How many purchases are you getting from the carts, and could you improve it?
Referral – Do the users like the service or product enough that they are recommending it to others?
Awareness
Awareness is all about building a brand through your marketing efforts. It has to do with introducing your products to potential customers. Pirate Metrics is intended to move potential clients down the funnel. They make clients aware of the goods or services. Metrics to analyze during an awareness campaign include site visits, CTR, and impressions. You can build awareness in the digital marketing era through several channels. These include channels such as affiliates, re-targeting, word of mouth, display, and SEO.
Acquisition
The first point of contact between the product and the customer. You have managed to move the client from awareness down to acquisition. They have browsed the website and read about a few of your products and services. With the numbers, you can analyze which channels are the most effective. You can trackback and tabulate which channels brought in the most visits. You can also analyze which ones do not seem to be working. You can also check other important aspects such as engagement levels. The best channels include promotions, landing page optimization, newsletter subscriptions. Metrics measured in the phase include sales chats, resource downloads, and email subscribers.
Activation
The client has moved from the acquisition funnel and purchased the company’s product. It is at this stage where you need utmost care to keep the customers in the funnel. Drop offs in this stage result from a bad user experience. These may include anything that may interfere with the enjoyment of the product. If you have a bad customer experience, users may drop off after signing up. Tracking the point at which the clients are dropping off is important. By tracking, you can improve UX or the product to match client expectations. Channels to work on include early customer success, feature adoption, and user experience. Metrics to measure include replies, freemium customers signed up, and product sales.
Retention
The stage is all about how many customers you are retaining and how many are leaving. If you are a maker of a SaaS app you are successful if people come back to use your product over and over again. For an e-commerce business, success is when the client buys from you many times. Churn rate is the most important thing to focus on during this stage. It will inform you how effective your product is at meeting the market needs. If people are dropping off very early, it might mean that the messaging or product is problematic. It is up to 5 times more expensive to get a new client than to keep one. As such, you need to focus on retaining as many clients as you can. Channels to work with to measure churn rates include re-targeting, and email marketing.
Referral
There is nothing that is more effective than word of mouth marketing. Recommendations of products and services by existing users carry a lot of weight. Getting users to this stage means that you have made such a good product that users want others to enjoy its utility. But, it is not easy to get clients into this stage and hence you may need to give them a push. This may include viral mechanisms such as promo codes, and share buttons. Using your referral marketing channels you can measure certain metrics. These may include the client’s social shares, referrals, and net promoter score. You can use these metrics to determine who your best evangelists are.
Revenue
Monitoring how much money is coming in is one of the most important things to do. Nonetheless, it is important to note that you need to improve the other aspects of the funnel first. Once someone has made their first payment it is important to ensure they have a good experience. This will help move them down the funnel to finally provide a predictable source of income. Using checkout flow, and shopping cart abandonment, you can measure various metrics. Such measures include customer acquisition costs, first buy, and trial to paid conversions. These will give you enough data to calculate your expected revenues.
Wrapping Up
The Pirate funnel metrics are simple tools that make tracking marketing data convenient. By following these metrics, it is easy to make better decisions that make it possible to grow a business. This is because the framework provides actionable data rather than assumptions and hypotheses.