5 pirated metrics for startups and SaaS companies
For startups, analytics is everything. Moreover, many entrepreneurs have a question: what and how to measure? The fate of the project depends on choosing the right control points.
In this article, you will learn about the “pirated” AARRR metrics that help startups and SaaS companies set up the mechanics of attracting and retaining customers.
This is a great technique for measuring and optimizing performance at every point in a sales funnel. The advantage of AARRR is its simplicity and accessibility: no technical knowledge. How to use it and why is it so called?
The model was invented in 2007 by the founder of the 500 Startups project, Dave McClure. The secret of the name is simple: "AARRR" is like a pirate battle exclamation. The chain consists of 5 steps: Aquisition - Activation - Retention - Referral - Revenue. Translated:
Dave claims that the founders of the project to understand and manage the process just focus on these five KPIs.
The quality of the entire sales funnel depends on which users you attract, where and how to "cast a fishing rod." If you collect “raw” leads at the beginning, then you get critically few sales.
Paid tools - contextual advertising, targeting in social networks.
Free - organic traffic (blog and guest posts), video platforms (Vimeo, YouTube), audio podcasts, webinars, email newsletters.
Do not take the figures at the stage of attraction as an occasion for vanity: “Hooray, we have 10,000 visitors a month!” So what? If you are not an online media, this is no good without the following KPIs. This is just a starting point for understanding which marketing channel works best.
A couple of “partisan” chips
Announcement in the profile heading on Facebook:
Personal announcements on the site
This is done by the LidX service - it “recognizes” the user profile on social networks and creates a personalized pop-up when you visit the site again. On it is his photo, name and special offer.
In addition, LidX collects information with links to profiles of all visitors to your site. And you can contact them directly:
It works through a subscription to a certain value. SaaS is a free trial. Example LPGenerator:
The activation phase may consist of several micro- conversions: in addition to subscribing to a product, say, subscribing to a newsletter. We measure private and general conversions - how much traffic you “drove” and how many subscriptions you received in the section by traffic sources and type of value.
You should not deceive yourself here either: many people subscribe and never reach the point of using the product. According to the statistics of the Totango service, there are 70% of them (!). Even if a person is registered in the trial, this does not mean that he will go to the service at least once.
The active part - only 20%, who independently understand, use the product and with a high degree of probability become paid users.
And 10% are undecided. They tried the service, but they have questions, doubts and objections. A common reason - something did not work out, especially with complex functionality. It is necessary to work with this part through the newsletter with cases, educational content: step by step to show how your product works and what benefits it gives with specific examples.
SaaS marketing expert David Skok says that each product has a Wow moment when the user set up the process with their own hands and saw the “first fruits”. This is not the end result, but he already clearly sees the benefits. Wow-moment is a kind of Rubicon, and if the user crossed it, he pays money in 9 out of 10 cases (if the speech is from a trial).
The activation phase most often consists of several micro-conversions.
We divide the configuration of dynamic content in Yagla into 5 stages:
1) Synchronization with an advertising campaign in Yandex Direct via the API;
2) Markup of replaceable elements using a visual editor;
3) Installing the code on the site;
4) Grouping of requests in the table of substitutions, prescribing options for substitutions;
5) Starting a project.
The last point is the same Wow moment, but it’s too early to calm down.
Here you continue to show the value of the product and encourage the user to log in and perform conversion activities as often as possible. This creates the skill of interacting with the service.
KPI - number of entries and uptime (at least 1 time per week). However, retention depends on the type of product. For example, for cloud organizers and task planners, the normal measure is 30 minutes every day. And for the accounting application, 1 time per month is enough.
At Yagla, user motivation is to track the results of a / b testing of each substitution with the original.
Green checkmark - the substitution worked as a plus; red "brick" - worse than the source, adjustment is necessary; hourglass - the test continues.
Question - how many users spread information about you? Of course, positive) These can be reviews on forums and in the VK and Facebook communities. If there is a referral program - the number of invites (invitations) + conversion of invites into a subscription.
Dropbox for invitations promises to expand user space to 16 GB:
AirBNB tempt money: $ 25 to you and your friend. Read more about their crazy program in the previous article Market Fit or how to find a G point at a startup .
When a project has a powerful social effect, it grows exponentially.
KPI of this stage - the number of clicks on referral links and the conversion of invites into payment.
Net income is a key metric for startup success. Without it, all previous efforts are useless.
Schematically, the entire AARRR process can be seen on the infographic:
Attraction - visitors come to the site and register in a free trial (demo version);
Activation - the user creates the first project;
Retention - users enter the service 4 times a month;
Distribution - each user invites 3 friends;
Income - customers make an annual monthly / annual subscription.
As you can see, AARRR is easy to understand and implement, easy to measure and manage. It is also very easy to see the effects of any changes. Put forward a hypothesis - test - measure results. This is the easiest growth model.
With all the advantages, there is an important limitation in the AARRR methodology: it provides an understanding of the effectiveness in the product launch cycle or hypothesis testing, but does not give a picture of what happens after that.
To help you, additional KPIs are MRR (regular monthly income), ARPU (average revenue per user), LTV (revenue from one client for the entire cooperation period). Interestingly, the conversion to sales and the number of transactions may fall, and MRR and LTV increase. The thing is the repeatability of payments over a long time. This is critical for SaaS companies.
PS Share your experiences in the comments and what you think about all this.
The following sources were used to create the material: pierrelechelle.com , blog.trak.io ,mastertext.ru .