Using the AAARRR Pirate Metrics to measure the success of your campaigns
In my most recent post, I examined how you can use the Bullseye Framework to identify your most promising marketing channels. In this post, I discuss how to identify whether those channels were indeed a success.
The first step is to recognize what success looks like. This starts by identifying the primary goals that prove success. Once you have these, you will want to track your performance, to ensure you are going in the right direction. The way to do that is to first decide what indicators you will use to measure this performance. These are called your Key Performance Indicators (KPIs). Please note that your KPIs are not your goals, but a measure of how well you are progressing towards those goals. Your goals should be fixed, in the future, while your KPIs are constantly changing and indicate your present performance.
It is important to focus on a small number of KPIs at any one time. You may change your KPIs, depending on where you need to focus your efforts, but try not to tackle them all at once. For example, if your goal is to get 500 paying users, you may think that your KPI should be the number of paying users. While this is obviously important for the end goal, it will mean nothing if you are unable to even get 500 people to visit your website. If that is the case, then you should first focus on getting people to your site, then you can focus on converting them to paying customers.
One approach to identify the KPIs that matter is to use a variation of the Pirate Metrics, invented by Dave McClure from 500 Startups. It categorises your marketing funnel into Awareness, Acquisition, Activation, Revenue, Retention and Referral (AAARRR, hence why it’s called ‘Pirate Metrics’).
For example, let’s say we have decided that our best GTM strategy is Search Engine Marketing. This is how you would track your performance.
Awareness: How many people saw the ad over a given period
Acquisition: How many of the people who saw the ad ended up coming to my site
Activation: How many of those who came to my site took a meaningful action, signed up for my free service for example
Retention: What proportion of those who took a meaningful action continued to come back to my site
Referral: What proportion of those who regularly visited my site positively spread the word
Revenue: How many of my users went on to become paying customers
The above is called a funnel, and you should be tracking how you perform across the funnel. Having said that, you should only focus your efforts on one or two at a time. To follow on from the previous example, if your goal is to get 500 paying customers (Revenue), but you find that people aren’t even visiting your site (Activation), then you will need to go up the funnel and make Awareness or Acquisition your KPI. By putting more potential customers in at the top of the funnel, you should get more coming through to Revenue.
Once you have decided on your KPIs, you will need to track them. There are plenty of tools that will help you with many of the above. Google Analytics is a good example of a free tool to understand user behaviour on your website, or you could pay for a more sophisticated tool like Mixpanel. Social media monitoring tools will also help track referrals or word of mouth. You will need to have these tools in place before you launch your campaigns.
In the next post, I will discuss how to use these KPIs and tools to test which acquisition strategy works best for you. You can also find out more about how to identify and track your marketing performance with KPIs and the AAARRR Pirate Metrics in my book ‘The Salt Test’.
AAARRR Pirate Metrics Funnel
