5 pirated metrics for startups and SaaS companies

For startups analyst decides everything. At the same time, many entrepreneurs have a question: what and how to measure? The fate of the project depends on the choice of the right control points.

In this article, you will learn about the “pirated” AARRR metrics that help start-ups and SaaS companies set up the mechanics of attracting and retaining customers.
This is an excellent technique for measuring and optimizing performance at every point in the sales funnel. The advantage of AARRR in the simplicity and accessibility of implementation: no technical knowledge. How to use it and why is it so called?

Model invented in 2007, the founder of the project 500 Startups Dave McClure. The secret of the name is simple: "AARRR" is similar to the battle cry of pirates. The chain consists of 5 steps: Aquisition - Activation - Retention - Referral - Revenue. In translation:
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Dave argues that the project’s founders need only focus on these five KPIs to understand and manage the process.

Attraction

The quality of the entire sales funnel depends on what kind of users you attract, where and how you “cast a fishing rod”. If you collect raw leads at the start, then the output will result in 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 distribution.

Do not take the numbers at the stage of attraction as a reason for vanity: “Hurray, we have 10,000 visitors per month!” So ​​what? If you are not online media, there’s no sense in this without the following KPIs. This is just a starting point for understanding which marketing channel works best.

A pair of "partisan" chips

Announcement in the Facebook profile header:



Personal announcements on the site

This is done by the LidX service - it “learns” the user profile in social networks and when you re-visit the site creates a personalized pop-up. On it is his photograph, name and special offer.

In addition, LidX collects information with links to profiles of all visitors to your site. And they can be addressed directly:



Activation

Works through a subscription to a certain value. SaaS is a free trial. Example LPGenerator:



The activation phase may consist of several microconversions: in addition to subscribing to a product, say, a newsletter subscription. We measure private and general conversions - how much traffic did you “drive” and how many subscriptions did you get in terms of traffic sources and type of value?

You should not deceive yourself here either: many people subscribe and never reach the use of the product. According to statistics from the Totango service, they are 70% (!). Even if a person is registered in a trial, this does not mean that he will go into the service at least once.

The active part is only 20%, which are independently disassembled, use the product and are more likely to become paid users.

And 10% are undecided. They tried the service, but they have questions, doubts and objections. A common reason is that something did not work out, especially with complex functionality. It is necessary to work with this part through a newsletter with cases, educational content: step by step to show how your product works and what benefits it provides with specific examples.

SaaS marketing expert David Skok says that every product has a Wow moment when the user set up the process with his own hands and saw the “first fruits”. This is not the end result yet, but he already clearly sees the benefits. Wow-moment - a kind of Rubicon, and if the user has switched, he in 9 cases out of 10 pays money (if it is from a trial).

The activation stage most often consists of several microconversions.

We divide the dynamic content setting in Yagla into 5 steps:

1) Synchronization with the advertising campaign in Yandex Direct through API;
2) Markup of replaceable items using a visual editor;
3) Install the code on the site;
4) Grouping requests in the table of substitutions, prescribing options for substitutions;
5) Start the project.

The last point is the very Wow-moment, but it is too early to calm down.

Hold

Here you continue to show the value of the product and encourage the user to enter and perform conversion actions as often as possible. This creates a skill to interact with the service.

KPI - the number of occurrences and opening hours (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 each day. And for an accounting application, it is enough once a month.

In Yagla, user motivation is to track the results of a / b testing of each substitution with the original.



Green check mark - substitution worked in plus; the red “brick” is worse than the source code, correction is necessary; hourglass - the test continues.

Spread

Question - how many users spread information about you? Of course, positive) It can be reviews on the forums and in the communities of VK and Facebook. If there is a referral program - the number of invites (invitations) + the conversion of invites into a subscription.

Dropbox for invitations promises the expansion of user space up to 16 GB:



AirBNB lure money: $ 25 to you and your friend. Read more about their crazy program in the previous article, Market Fit, or how to find point G in a startup .

When a project has a powerful social effect, it grows exponentially.

The KPI of this stage is the number of referral links and the conversion of invites to payment.

Income

Net profit is the key metric of a successful startup. Without it, all previous efforts are useless.

Schematically, the entire AARRR process is fashionable to see at infographics:



For example:

Attraction - visitors come to the site and register in a free trial (demo version);
Activation - the user creates the first project;
Hold - users enter the service 4 times a month;
Distribution - each user invites 3 friends;
Revenue - customers make an annual monthly / yearly 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. Hypothesize - test - measure results. This is the easiest growth model.

Attention!

With all the advantages in the AARRR methodology, there is an important limitation: it gives an understanding of the effectiveness in the product launch cycle or hypothesis testing, but it does not give a picture of what happens after that.

Additional KPIs to help - MRR (regular monthly income), ARPU (average revenue per user), LTV (revenue from one client over the entire period of cooperation). Interestingly, the conversion to sales and the number of transactions may fall, and MRR and LTV will increase. It's all about the repeatability of payments for a long time. This is critical for SaaS companies.

PS Share in the comments your experience and what you think about all this.

Sources used to create the material: pierrelechelle.com , blog.trak.io , mastertext.ru .