November 18, 2021

What AAARRR Pirate Metrics?

Ahoy there to all the business professionals of the world! Whether you’re responsible for organization metrics or are at the helm of your business, you know what a difference insightful data can make. Tracking your progress across key performance indicators is how you determine the strongest elements of your business, in addition to the areas that need some fine-tuning. But key performance indicators look different for every organization, so how do you know what metrics matter most to you?

Most organizations would be wise to set sail with Pirate Metrics, also known as AAARRR. These metrics are a set of KPIs that every business should use to evaluate its progress and success. The AAARRR framework consists of six metrics:

  • Awareness
  • Activation
  • Acquisition
  • Revenue
  • Retention
  • Referral

Awareness

Every interaction before you know who the person is

Awareness metrics are ultimately what determine whether a prospective lead will eventually begin the long journey toward becoming a lifelong customer, which is why it’s so important to pay close attention to the reach and exposure of your brand.

You know the old saying about how if a tree falls in a forest, and there’s no one around to hear it, does it make a sound? Similarly, if your business has game-changing solutions or services, but no one is able to find them, do they actually matter? Giving your brand the needed time, energy, and resources it needs to make an impression in the market and resonate with your target audience is what helps your unique value propositions stand out in the crowd.

Having a comprehensive marketing strategy in place to outline your online and offline marketing efforts is a great place to start building awareness. Social media, SEO, email marketing, events, advertisements, and promotional materials are all ways you can start to build awareness around your business. Remember, the more people know about your brand, the more likely they are to become customers.

Tracking awareness metrics enables your business to better understand how your brand is perceived in the market, in addition to determining which channels are most effective for reaching your target audience. From there, you can optimize your marketing efforts for maximum impact.

Awareness metrics include:

  • Website visits: how many people are visiting your website on a daily, weekly and monthly basis.
  • Click-through rate (CTR): the percentage of people who click on a hyperlink vs. the number of people who see that hyperlink.
  • Impressions: the number of people who could have seen your content. Impressions indicate potential reach.
  • Social impressions: the number of people who had your social post appear in their feed; sometimes called “reach.”
  • User-behavior metrics
    • Time on page: the average amount of time site visitors spend on specific webpages.
    • Bounce rate: the number of site visitors who immediately leave your site.
    • Pages per session: the average number of pages viewed by visitors before they leave your site.
    • Percentage of new vs. returning visitors: the ratio of how many of your site visitors who are new vs. how many are returning.
  • Influencer engagement rate: The percentage of influencer followers who engage with your brand's content.
  • Influencer share of voice: The amount of brand exposure in relation to your competition on a specific social media platform.
  • Influencer cost per engagement (CPE): The cost to acquire a single engagement with an influencer's followers.
  • Ad spend: The amount of money spent on advertising over a specific time period.
  • Ad click-through rate (CTR): The percentage of people who click on an ad after seeing it.
  • Cost per click (CPC): The cost of acquiring a single click through an advertisement.

You can find these metrics through search engines, Google Analytics, your CMS, individual social platforms and SEO tools like SEMrush.

Acquisition

Lead Capture to Activation

With a strong understanding of how your business is perceived in the market, you can start to think about how you move prospective customers down the sales funnel and ensure they become closed-won deals. This is where acquisition metrics come into play.

Acquisition metrics give you a clear understanding of whether your marketing strategies are working and attracting the right customers to your business. Lead capture and conversion rates are among the most important acquisition metrics you’ll want to track and analyze.

As we’ve mentioned before, knowing the effectiveness of your marketing efforts is made much easier when you have data-backed insights to reinforce your hunches. Acquisition metrics enable you to gauge the effectiveness of your marketing campaigns across varying platforms, channels, and audiences. Reviewing acquisition data allows you to see which campaigns are bringing in the most leads, while also highlighting the campaigns that aren’t delivering results. 

With insightful acquisition data at your disposal, you can make informed decisions about how you handle your marketing budget and determine which campaigns should be top priorities.

Acquisition metrics include:

  • Visit-to-lead conversion rate: the percentage of your site visitors who become leads.
  • Contacts generated: how many contacts you’ve created over a given time period.
  • Leads generated: how many leads you’ve created over a given time period.
  • MQLs, SQLs, CQLs and opportunities generated: how many marketing qualified leads, sales qualified leads,  chat qualified leads and opportunities you’ve created over a given time period.
  • Social engagement rates
    • Shares: how many shares you receive on a single post or across a platform.
    • Likes: how many “likes” or “favorites” you receive on a single post or across a platform.
    • Comments: how many comments you receive on a single post or across a platform.
  • Email click-through rate: the percentage of people who opened an email that clicked on a hyperlink within it.
  • Cost of Acquisition (CAC): the cost of acquiring a single customer.
  • Average deal cycle: how long it takes on average for a prospect to progress from their first interaction with you to closing the deal.

You can measure these metrics through your marketing automation and CRM platforms, in addition to within function-specific platforms, like your conversational marketing tool and social media platforms.

Video may also influence acquisition metrics since it offers prospects an opportunity to engage with your content and potentially convert, but video metrics are not limited solely to the acquisition phase.

Download the Essential Guide to Demand Generation to learn the essentials of  deploying this powerful strategy within your business.

Activation

Sign-up to paying or non-paying customer; onboarding

If you’re a SaaS business that’s keen on enabling your customers to get the most out of what you have to offer, this section is for you. Activation metrics help your business understand where your customers are both perceiving and receiving value from your solutions. It’s how you know whether your customers are actively engaging with your product or service before becoming a customer.

Activating your customers refers to the process of ensuring they are able to experience the benefits and value props of your product or service so that they actively engage with your brand. By keeping a close eye on activation metrics, you can start to learn which actions or engagements from your business are having the greatest impact on the customer experience.

Whether that means tinkering with the user interface or providing more product walkthroughs at varying stages of the buyer’s journey, activating your customers increases the likelihood that they’ll be satisfied with your business — to the point where they aren’t looking for an alternative solution.

On the flip side, failing to activate users will quickly lead them to seek assistance from someone else. After all, if someone doesn’t quickly see the value in what you’re providing, what reason do they have to learn more? To improve customer satisfaction and bolster your bottom line, look to activation metrics as a sign of how well you’re engaging with your target users at every stage of the buyer’s journey.

Activation metrics are most applicable to SaaS products where someone can sign up for your product without talking to sales. 

Activation metrics include:

  • Product qualified leads (PQLs): how many people are using your product in a way that indicates they’re ready to upgrade or become paid customers.
  • Lead-to-sign-up conversion rate: how many leads are signing up to use your product.
  • Number of sign-ups: how many people are signing up to use your product in a given time period.
  • Sign-up-to-PQL conversion: how many people who signed up for your product became PQLs.
  • Time from sign-up to active usage: how much time passes on average between a person signing up to use your product to meeting your definition of an active user.

Activation metrics can be measured within your product and through your CRM.

Download the Essential Guide to Demand Generation to learn the essentials of  deploying this powerful strategy within your business.

Revenue

Activation to paying customer

Don’t get us wrong — having a lot of social media followers or a high NPS score are great things to have going for your business. But at the end of the day, you’re in the business of turning a profit. Naturally, the financial performance of your business is top-of-mind for you, which is why you need to keep a close eye on revenue metrics.

Measuring revenue is ultimately what allows you to understand the profitability and financial success of your business. Revenue metrics provide you with tangible ways to deliver year-over-year growth, whether that’s by analyzing revenue by product or service, revenue growth rate, or total revenue across the organization. 

Again, qualitative data like customer satisfaction scores and social media followers can be used to form a holistic picture of company performance. But revenue metrics are where you’ll actually see whether your current marketing efforts are yielding profits.

Having a clear sense of the financial performance of your products or services enables you to make data-driven decisions regarding budget planning and marketing strategies. Resource allocation, pricing, and cost management are all components of your business that need to be managed with data-backed insights. Revenue metrics enable you to take the guesswork out of these responsibilities and make it easier to chart a clear course toward year-over-year growth.

Revenue metrics include:

  • Average deal size: the average dollar value of your closed deals.
  • Monthly recurring revenue (MRR): how much revenue you can expect to earn on a monthly basis from both new and existing business.
  • Annual Recurring Revenue (ARR): how much revenue you can expect to earn on a yearly basis from both new and existing business.
  • Gross margin: The difference between the revenue and the cost of goods sold.
  • Gross profit: The total revenue minus the cost of goods sold.
  • Net profit: The total revenue minus all expenses.
  • Return on investment (ROI): The return on investment, expressed as a percentage, which measures the profitability of an investment.
  • Average order value (AOV): The average value of an order placed by a customer.
  • Revenue per user

You can measure these metrics through your CRM and BI tools.

Retention

Customer

You’ve been doing this long enough that you know business is more than just attracting as many new customers as possible. Just as important is your ability to keep your existing customers satisfied and coming back for more. To get a sense of how well you’re catering to your existing customers, look to retention metrics.

Retention metrics help you understand how loyal of a customer base you’ve built up over the years. They also signal whether you’re having trouble turning one-time customers into life-long customers. You likely know that loyal customers are maybe the most valuable asset to your business. It’s far more expensive to continually attract new customers than it is to retain existing ones. Having a comprehensive understanding of how well you’re satisfying existing customers is critical to maximizing your ROI and keeping your business on the up and up.

When you’re able to identify areas of improvement when it comes to retention, you can effectively boost customer loyalty AND attract new users by turning your existing customers into brand ambassadors. Retention metrics shed light on how your business is performing beyond the traditional stages of the buyer’s journey, and reveal how you can keep returning customers in your corner.

Retention metrics include:

  • Customer lifetime value (CLV): the average amount of revenue you receive per customer over the entirety of your engagement with them.
  • Retention rate: the percentage of customers who stay with your company over a given time period; the inverse of churn rate.
  • Churn rate: how many customers your business loses in a given time period.
  • Payback period: how long it takes to recover the cost of acquiring a customer.
  • Product usage: how much and to what extent a customer is using your product. High usage is an indicator of retention.
  • Customer satisfaction: do your customers feel like your product or service is fulfilling the purpose they purchased it for? If customers are unsatisfied, they are likely to churn.

You can measure retention metrics within your product and in your CRM.

Download the Essential Guide to Demand Generation to learn the essentials of  deploying this powerful strategy within your business.

Referral

Customer to evangelist

On that note of turning customers into evangelists, let’s talk about referral metrics.  Referral metrics measure whether your company’s existing customers are taking the critical step from simply being users of your products or services to passionate champions of your business. Referral metrics shed light on whether your referral marketing efforts are paying off, and help you identify which customers are most likely to refer your business to their friends and family.

To enable year-over-year growth and maximize your ROI, you need to have effective referral marketing strategies in place that encourage customers to spread the word about your business. Data shows that customers who are referred to you by friends, family, or colleagues are more likely to become loyal customers and make repeat purchases. Tapping into this audience should naturally be a top priority for your teams.

While word-of-mouth marketing can still work in your favor, today’s digital age has largely seen social media and other online platforms replace word-of-mouth marketing. The good news here is that referral metrics are now easier to track since most engagements, interactions, and referrals are taking place on platforms that provide you with insightful data. 

For example, it’s easy to search Twitter for mentions of your business, and review that content to see which users are advocating on behalf of your business to their followers. When you incentivize loyal customers to share their positive experiences on their own social platforms, the number of referrals you get can grow exponentially.

Referral metrics include:

  • NPS score: how willing your customers are to recommend your product or service to others.
  • Social shares: how often your customers are sharing your content with their networks on social media.
  • Review rates: how many reviews you receive in a given time period.
  • Referred business: the amount of business that comes from referrals, usually through word of mouth.
  • Customer satisfaction: do your customers feel like your product or service is fulfilling the purpose they purchased it for? If they are satisfied, they’re more likely to recommend your product or service to others.
  • Word-of-mouth referrals
  • Referral conversion rate
  • Influencer marketing conversion rate

You can measure reviews and social shares through review sites and social platforms. NPS scores and referred business should be tracked in your CRM, but that can require integration between referral channels and your CRM.

Takeaway

Dividing your metrics into the pirate metrics categories will help you gain better insight into what areas of your business need the most attention. This is how companies can adopt a growth marketing framework. 

Growth marketing uses the pirate metric categories to determine where you should dedicate resources to improve business outcomes. Once the areas for improvement have been identified, growth marketers use the scientific method to conduct experiments in order to systematically optimize their strategy.

Demand Generation Guide

Guido Bartolacci

Guido is Head of Product and Growth Strategy for New Breed. He specializes in running in-depth demand generation programs internally while assisting account managers in running them for our clients.

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