In today’s world, where customers are inundated with text sales, emails, tweets or Facebook ads, figuring out how to grab the attention of your customer can be overwhelming.
Where do you even start? This is where a purchase model or funnel comes into play.
You need a model to be more efficient
To be more efficient in your business, you need a model: a funnel that dictates the journey your customers take towards a sale. The go-to model for many marketers and businesses is the AIDA model.
We’ve covered the history of the AIDA model before, but suffice it to say it has served marketers and businesses for centuries.
You might have heard of the AIDA described as purchase and conversion funnels – both of which are modeled with AIDA, but simply use the context of consumer-focused marketing and e-commerce.
Modern version of AIDA emerged in last decade
As technologies and the buying process changed, AIDA needed additions and changes as well. AIDA became more flexible as it became clear that buyers might follow different journeys or that the pieces of the model might be more effective in varying order.
Concepts based on AIDA emerged with additions such as satisfaction, confidence, search, like/dislike, share, love/hate. These concepts morphed and molded into a new modern version of AIDA known as AARRR.
AARRR startup metrics marketing funnel for new customer lifecycle
Technology and social media were big proponents in developing new concepts of the AIDA model. Due to these ever-changing variables of technology, a new customer lifecycle and conversion behavior emerged which necessitated a new model. The new model – AARRR – is focused on metrics and is, therefore, tailorable to your business and customers.
So, what is AARRR? Here’s what it stands for:
- Acquisition. Is anyone interested in your product or services? This can be seen in, for example, the number of user sign-ups for a program or newsletter. Take the percentage of this and compare it to a week or previous period for insight on progress.
- Are users taking the next step with you? After a user has signed up, activation is the next action you want them to take i.e. saving an infographic. Find the percentage to tell whether that action step is converting well.
- Retention. How many users are returning for your services? If you have a 10-week program that users sign up for, retention will be seen in the percentage of users returning for week one, week two and so on.
- Are your customers referring you to friends, family, and acquaintances? If your customers are sending you business because they love you or your product, they’ve turned into marketers for you! Find the percentage of users who were referrals to see if this is a big part of your business.
- How much are you making? Tracking revenue allows you to see where changes create a big impact. If your marketing campaign targeted a different demographic and your revenue doubled, you can track it to that marketing campaign’s conversion and continue what works well. Beware of tracking this metric too early, however, without a good foundation.
For each metric in AARRR, you need to establish its definition for your business and why you should track it. Metrics, for the most part, will be unique to your industry and even your business.
One important note: Retention, which can increase revenue exponentially if done right, is harder than before because it requires knowledge of what your visitors and customers are doing on a much larger scale. You need buyer personas and your customers’ journeys.
Why AARRR startup metrics?
Now that you know the basics, the question is: why should you consider AARRR for your business? For startups, growth is important, and the key to growth often comes from focusing on metrics. Focusing on too many can be detrimental, however.
This is where AARRR comes in; it breaks metrics down to 5 very important and key areas to define, tailor and track for your particular business. While all 5 are important, you might not track all at first as you might not have ways to track each piece.
Don’t get discouraged, you’ll figure it out and with the right model you’ll be better equipped for growth and tracking it at a later stage.