Measuring Growth can be a complicated endeavor. The big picture is easy. Your business grows or it doesn't. But when it comes to understanding the impact of different departments and individuals, it can get murky fast.
Was it Sales or Marketing that led to our 10% MOM growth curve? Or the new product updates? Or something we did in Customer Service? What should we do again the next go around? What should we cut out or improve?
Your business is complicated, so measuring and understanding it will be too. Unless, of course, there's a single measurement standard that can be applied to all of it. Enter the AARRR Pirate Metrics Framework - a standard of measurement for the entire business. Sales, service, and digital marketing KPIs are all tied together to capture the fluid and diverse experiences your customers have.
And, it's more than just a measuring tool. Pirate Metrics also helps you stay calibrated to your North Star when you introduce new ideas and campaigns into your content calendar. Clarity around where in the customer experience any new idea impacts helps you drive growth while steering clear of costly distractions.
A Breakdown of Pirate Metrics
Why do we call these marketing KPIs "Pirate Metrics?" Because if you sound out the acronym, you sound like a pirate:
- Acquisition
- Activation
- Revenue
- Retention
- Referral
Aarrrr, matey ☠️!
A is for 'Acquisition'
When it comes to B2B, the simplest and cleanest acquisition metric is lead generation--the transition from not having a contact in your database to having that contact in your database. Maybe you buy their information off of a list or vendor, but ideally, this information is given to you willingly and directly from the human being tied to it.
In D2C like E-commerce, Acquisition refers to traffic to the store and product pages. Becoming a lead is also valuable, but not nearly as important as it is in B2B.
Note: Your customer acquisition rate is tied to "Acquisition in the AARRR framework, but they're not synonymous.
Inbound lead generation, a method of acquisition, which involves attracting visitors to your website through SEO, blogging, social media, and paid media--and converting them into leads through gated content offers, is an important aspect to growth. However, this is the very beginning of the buyer's journey, not the end, and shouldn't be treated as if it were.
It's also not just the job of marketing to generate noise and leads. Don't forget about sales! They too can drive visitors to the website by way of calling, social media, and networking.
Every single aspect of generating those leads would go into the Acquisition bucket, from setting up ads to sending emails to social media to blogging, to the offer itself and the form it sits behind or landing page or thank you page. All of it.
Common Acquisition metrics and KPIs:
- Leads
- Marketing Qualified Leads
- Sales Qualified Leads
- Ranked keywords
- Impressions
- Traffic
- Click and bounce rates
- Visitor-to-contact ratio
- Landing page conversion rates
A is for 'Activation'
Your leads need to raise their hand at some point and tell you that they want to engage with your business in the sales cycle. This can happen by way of signing up for a trial on your software or going through the discovery process with your sales team.
You can activate your leads with sales calls or emails, marketing emails, social media, chat bots, and more.
Common Activation metrics and KPIs:
- Discovery calls set (Deals created)
- Free trial sign-ups
- B2B2C program sign-ups
- Email open/reply/click rates
- Sales call connects
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R is for 'Revenue'
Revenue metrics are also dependent on the business type. A B2B, for example, will likely require an executed SOW and paid invoice to consider revenue success. Whereas a SaaS may not generate revenue until individual users are activated after the contract is signed. Onboarding mobile app users could be the Revenue cycle even after they've been charged.
Common Revenue metrics and KPIs:
- First payment received
- Signed SOW (sometimes considered a KPI)
- Customer lifetime value (LTV)
- Payment information entered
- Trial expired without cancellation
- Customer acquisition rate
R is for 'Retention'
If your contracts are monthly vs annual, you may have different metrics to measure here as well, but recurring revenue is the key.
Common User Behavior and Retention metrics and KPIs:
- Renewal rate
- Churn rate
- Early termination rate
- Recurring revenue
- Upsell revenue
- User-behavior metrics (are they logging in or engaging with your program?)
- Customer service engagements & resolutions
- Survey results
R is for 'Referral'
This is an easy one... are they sending you business, and are you able to close it? Just like everything above, this can come from both sales and marketing. Of course, you can also generate referrals through production and the app itself.
Common Referral metrics and KPIs:
- Referral leads closed
- Referral revenue generated
- Referral leads received
Where are your trouble spots?
Whether you're trying to fill the top of the funnel with more leads, generate better outcomes in the sales cycle, retain your clients long-term, or anything in between, the AARRR framework can help! And, we show you how to set and leverage your Pirate Metric status in our Experimental Marketing Strategy course and certification.
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