Understanding the Pirate Funnel AAARRR: A Practical Guide & Examples

Pirate Funnel Examples

Here are some examples below to help you better understand the funnel stages for each business model:

1. E-Commerce

In the e-commerce sector, the Pirate Funnel helps track the buyer's journey from discovery to loyalty.

2. SaaS Software

For SaaS companies, the Pirate Funnel focuses on long-term user acquisition and retention.

3. Mobile Application

Mobile applications have a specific funnel focused on user engagement and retention.

4. Marketplace

This table shows how to structure a Pirate Funnel for a marketplace, focusing on balancing sellers and buyers to maximize transactions.

5. Online Content

This table details the Pirate Funnel stages for online content, emphasizing engagement and monetization through content.

6. Video Games

This table outlines the Pirate Funnel stages for video games, aiming to maximize player engagement and revenue from in-game purchases.

By adapting the Pirate Funnel to your specific sector, you can identify strengths and areas for improvement in your customer strategy, from initial discovery to long-term loyalty.

How to Find the Bottleneck in Your Pirate Funnel?

Using "Hard Data"

Data analysis is a crucial skill for Growth Hackers, but it can be simplified. Here's how to easily identify your bottlenecks:

1. Calculate the conversion rate between each stage of the AAARRR funnel: • Divide the number of users at stage 2 by those at stage 1 • Then divide stage 3 by stage 2, and so on
2. Identify the lowest percentage: this is your main bottleneck.

This simple method allows you to quickly determine where to focus your optimization efforts.

Using "Soft Data"

Once the bottleneck is identified, it's important to understand the "why":

• Use tools like Hotjar to track user behavior
• Send satisfaction surveys
• Conduct direct interviews with your customers
• Using tools to analyze customer behavior helps understand why they drop off at certain stages.

Choosing Your Focus and OMTM (One Metric That Matters)

After identifying the root cause of customer loss, apply the GROWS method:

1. Generate ideas to solve the problem
2. Prioritize these ideas
3. Describe growth experiments
4. Execute these experiments
5. Study the results (and celebrate both failures and successes!)

To delve deeper into this approach, check out the article on the GROWS process of Growth Hacking.

Questions to Ask :

• What is the lowest conversion rate between two stages of our funnel?
• How many people are "lost" between each stage?
• What are the main friction points identified by our users at this stage of the funnel (in order: awareness, acquisition, activation, retention, referral, revenue)?

By applying this method, you have identified an area for improvement through Pirate Metrics. This starting point now allows you to know where to focus your efforts to boost your growth. Every time you improve a stage of the Pirate Funnel, you enhance your long-term growth.

Optimizing Pirate Funnel Stages

Conclusion

The AAARRR (or AARRR) framework is the simplest and most effective way to optimize your business and measure growth.

If we break down the customer lifecycle of a company or startup, we have 6 key phases as follows:

• Acquisition Phase: A potential customer reads your blog and discovers that your app is valuable. Then, the potential user goes to the app store and searches for your app (how many people?).
• Activation Phase: The potential customer installs the app and follows the welcome process.
• Retention Phase: During the first month, a potential customer opens and uses your app more than ten times.
• Referral Phase: At least one friend is referred to your app by a prospect.
• Revenue Phase: The prospect becomes a paying customer. Each measure has deeper layers, and I encourage you to delve into optimizing each of them. Defining measurable steps for each phase of the AAARRR model is essential for performance tracking.

With each iteration, you should improve one of these stages: your OMTM will then be focused on the biggest barrier to your company's growth, which should be your goal during your experiments.

How to Use the Pirate Funnel for a Marketing Strategy?

To use the Pirate Funnel, follow these steps:

1. Measure the metrics at each stage (e.g., growth rate).
2. Identify the area where you achieve the least results (e.g., low retention).
3. Test optimizations (e.g., A/B testing).
4. Measure the return on investment. By doing this, you'll see where to focus your time and efforts.

Why is the Pirate Funnel Relevant for a Startup?

The AARRR Pirate Funnel, used by growth hackers, helps startups identify weaknesses in the customer journey, maximizing long-term growth with a limited budget. Example: optimizing retention to reduce churn. Growth Hacking teams focus on optimizing any stage of the funnel, unlike marketing teams.

What are the Benefits of Dividing Step 3 (Retention)?

Dividing Step 3 (Retention) allows you to analyze sub-steps (e.g., daily vs. monthly users). This helps understand how many people return and target specific actions to improve your funnel. The figures from steps 2 and 3 are not enough to understand why customers drop off.

Can a Beginner Use the AARRR Method?

Yes, the AARRR method is accessible for beginner growth hackers. Each stage of the pirate funnel is easier with tools like Google Analytics or templates (e.g., on Miro). Start with a key metric (North Star Metric) as your entry point.

How to Identify Opportunities with the Pirate Funnel?

By analyzing all stages, you will see which link is weak (e.g., low activation). This reveals opportunities for actions like SEO campaigns (e.g., how many people visit your website, etc.) or personalized emails, optimizing the growth rate. Good retention practices include sending personalized emails to customers.

What is the Official Name of the Framework and Who Created It?

The official name is Pirate Funnel or AARRR, created by Dave McClure in 2007 to structure the marketing strategies of startups focused on long-term growth.