What Spooked the Product Manager? The AARRR Pirate Framework

A Product Manager often sails in uncharted waters. Like a ship captain without a map, they must rely on observations from instruments to avoid dangers and reach the destination safely. This article will introduce “The Pirate Framework”, an aid to Product Managers in organizing key observations that support decisions to stay on course, or to pivot to a new tack.

Venture capitalist, Dave McClure, defined the acronym “AARRR”, which stands for Acquisition, Activation, Retention, Referral and Revenue; commonly called the Pirate Framework.  Each of the five terms in “Aarrr” (go ahead, say it out loud like a pirate), represents key milestones (or “lighthouses”) that mark progress of the voyage to convert a perfect stranger into one of your customers.

Also known as a type of “conversion funnel”, the Pirate Framework does not specify what or how to measure the conversion journey; it only defines the five major steps:

1. Acquisition: How do potential customers find our product?
2. Activation: Will potential customers try our product?
3. Retention: How many potential customers like our product?
4. Referral: Will customers recommend our product to other potential customers?
5. Revenue: How many customers would exchange value for our product?

A Ship Master must decide which instruments to bring aboard for voyages. A Product Manager must decide which metrics to use in measuring conversion progress of potential customers. Choose wisely; if measurement data are missing, inaccurate or misinterpreted, you may sink your ship.

Product Managers beware, there are many obstacles to block your customer's safe passage. Here are a few facts on shipwrecks during the e-commerce customer voyage to revenue:

• 47% of customers expect web pages to load in 2 seconds or less
• 57% of visitors will leave the website if load times are longer than 3 seconds
• 57% who leave, 80% will never return to your site
• Of that 80%, 44% will tell their friends about their bad experience

Introducing Metric Types

There are four metric types that can be used to measure customer conversion in any of the five stages in the Pirate Framework:

• Quantitative: Traffic Analytics/User Engagement
  • Report what users do. Track usage & conversion % for all or an empirical sample of X users.
• Qualitative: Usability Testing/Session Observation
  • Watch what users do. Figure out conversion blocks & solutions. Based on a small number of users.
• Comparative: A/B & Multivariable Testing
  • Compare what users do in one scenario vs another. See which copy/graphics/UI/flow is most effective in conversion.
  • Customer demographic comparison.
• Competitive: Monitoring and Tracking Competition
  • Track competitor activity and compare against yours. If possible, compare keyword traffic, demographics targeting, user satisfaction, etc.

Keep your Metrics simple

One guideline for good metrics: Less is More. It's better to have a few simple, reliable data points than a larger number of complex output. Remember that most of the earth was charted using only a compass, watch glass, timepiece, and sextant. Suggestions for simple conversion funnel measures include:

• Acquisition
  • Channel Volume, Cost & Conversion Rate.
• Activation
  • View X Pages, spend Y Seconds, make Z Clicks.
• Retention
  • Repeat Visits, over X Days or Weeks.
• Referral
  • Site includes features that encourage facilitate referral and/or,
  • Count of product mentions in eMail, links, blogs, social media, widgets, reviews, f2f, etc.
• Revenue
  • Users conduct some monetization behavior.
  • Choose a next-best proxy to revenue (free to try, etc.)
  • Include both 1) minimum revenue & 2) break-even revenue.

Recognizing Danger and when to Change Course

The stalwart Product Manager embarks or the perilous journey to launch a new product. They are equipped with the Pirate Framework and a small set of proven metrics and the means to make regular measurements. They will encounter problems at every step. Instruments, metrics and measures can only provide data, the final and most important action is up to the Product Manager to make key decisions at every step.

Acquisition

The acquisition stage is usually when a user or potential customer is introduced to a product or brand. A single touchpoint isn’t often enough at this stage. That is why organizations use several channels to gain visibility.  Important questions to ask; what are the:

• High volume channels?
• Low cost channels?
• Best-performing conversion channels?
• Note to the Marketing Team
  • Design & Test Multiple Marketingktg Channels
  • Select for High volume, high conversion, low-cost channels
  • Measure deeper down the conversion pipeline, not just to website/landing page
  • Segment & select channels & customers by conversion at lowest possible level

Activation

At this stage, you need to make the acquisition concrete by enabling users to immediately start using your product. Don't do a lot of clever guessing; do lots of AB tests on landing pages. Using product features to get people to engage and have a happy experience. Try to achieve 10 to 30 plus seconds on the site and two- or three-page user clicks with:

• A homepage that converts, and that is optimized is essential to activate as many users that land on a site.  
• Landing pages also help you create a controlled experience for users to take a set of actions you want them to take.  
• Product features empower your clients, but they also work as a magnet for new, potential customers.  
• Note to the Product Team:
  • Don't just build a bunch of new features
  • Focus 80% on existing features that improve your conversion pipeline
  • Focus 20% on any new features
  • Hypothesize the customer lifecycle, test, measure, iterate
  • A/B Test a LOT
  • Measure for conversion improvement and repeat

Retention

During retention, it’s essential to look at the user engagement and how to make then stick around:

• Automated Emails & Alerts, to enable users to understand the benefits of your product and help them benefit from it, thus reducing the churn at this stage, which brings the user closer to becoming a paying customer.
• Blogs and content help build that kind of trust and ongoing relationship with the audience, to make your product sticky.
• System Events, Journey Milestones, Time-Based Events and Personalized features.

Referral

You want to make sure to trigger network effects so that existing customers can bring you more customers. However, don't try and do viral marketing campaign until you know customers like your product. Do a selective qualitative testing to figure out if you're at 8 out of 10 or better and then start to do viral marketing

• Campaigns,
• Contests,
• Emails & widgets

Revenue

It is essential to focus on how to make the potential customer become a paying customer:

• Ads and switching on the paid engine at this stage makes sense to speed up the growth process.
• Lead generation and a continuous stream of qualified prospects are critical to keeping the business going.
• BizDev operations help a business capture as much business value as possible. That is even truer for enterprise businesses.
• Subscriptions and more

The Pirate Metrics are an important navigation aid as you sail into unknown territory. A Product Manager cannot know the barriers and dangers ahead. Careful measurement and analysis can tell you when to make course corrections. Don’t ignore any warning signs. Sometimes the best decision is to pivot and sail on into a new destination.

I’d like to hear your thoughts on this topic. Contact me on LinkedIn so I can learn from your experience and ideas for improvement to the practice of product management metrics.

Related Posts: The ABC's of A/B Testing

Henry Pozzetta is an Agile Coach with years of experience in software engineering and product management. His goal is to accelerate the delivery of value from product management with progressive adoption of agile best practices and lean servant leadership principles.

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