by Tristan Gillen, founding partner at Growth Division
Becoming more in tune with the mental state and mindset of someone is the key to communicating effectively with them. That isn’t just true of personal relationships; it’s also true of business to consumer relationships.
Thinking about your customer’s journey and strategically interacting with them will help you deliver objective-driven messaging at every stage. Nurturing your prospective and existing customers like this will go a long way in helping you build brand advocacy amongst your target audiences.
The AARRR framework aims to provide a helpful template to build customer journey maps, allowing you to visualise each step and create efficient marketing plans for each.
Why is the customer journey so important for startups?
It’s easy to oversimplify the relationship you have with your customers. In reality, your customers’ experience with your brand is made up of a complex web of interactions that form a long journey. There are many different touchpoints and moments of engagements they might have had with your brand before deciding to purchase and continue purchasing.
Communicating with them in the wrong way at the wrong time creates a barrier to their business that can be avoided. It’s easy to break a high-value relationship by neglecting a part of your customer’s experience.
Putting effort into understanding your customer’s mindset and mapping their journey is an effective way to make your communications and content work harder for you. By analysing your audience’s current state, you can better offer them what they need and start building more strategic plans focused on performance and growth.
If you’ve ever been confused why customers add things to their basket but never check out, don’t take you up on an obvious upsell, or follow you on every social media platform but never engage, then it’s probably time to do some customer journey mapping.
What is the AARRR Framework?
The AARRR framework, playfully known as the Pirate Metrics Framework, is a helpful template for startups looking to explore their customer journeys. The approach was coined by Dave McClure, founder of startup accelerator 500 Startups, as a way to help small businesses develop their strategy for growth.
AARRR is, unsurprisingly, an acronym and stands for:
- Acquisition
- Activation
- Retention
- Referral
- Revenue
The framework aims to break down the user or customer journey into five key steps, from which you can explore how best to market and communicate with your target audience and develop an effective strategy for each stage.
By focusing on one step at a time, you can make sure you’re aiming for more performance-driven marketing.
Step 1: Acquisition
Acquisition refers to how new customers find you or how you find them. This stage is about reaching your target audience and what their first interaction with your brand should be.
Here is where it is critical to present your brand in the best light for the first time. Highlight your USPs, communicate clearly, and let your audience know what you’re about. After all, you only get to make one first impression.
Often, the most important metric at this stage is traffic to your website. You want to catch the attention of prospective customers and get them to an environment where you can communicate with them better. Once they’re there, you can consider them a lead.
Think about the different channels that drive traffic to your website. These could include SEO, social, paid media, affiliates, SEM, email, and more. Analyse which ones have the highest volume, at the lowest cost, and are the best performing. Once you’ve figured this out, continue to monitor and optimise.
Key questions to ask:
- Which channel drives the most traffic?
- Which traffic source converts the best?
- At what point can you start collecting data?
- What is the CPA for each channel?
- What is the messaging approach for each channel?
Step 2: Activation
Activation describes a customer’s first experience with your product or service. It’s essential to define the right metric for this step to be able to optimise towards it. Examples may include app download, free trial redemption, sign up, or time spent on site.
Regardless of your offering, this is your chance to show new customers what you can do for them. You want their first experience with you to be easy, pleasant, and match their expectations.
At this point, focus all your marketing and product efforts on making sure your new customer likes you enough the first time to come back again. Product testing and A/B testing are your best tools at this point.
Key questions to ask:
- What would you define as a customer’s first experience?
- What tactics could encourage more uptake of your product/service?
- What is the bounce/drop off rate like at this stage?
- What feedback do you usually receive at this stage?
- What is typical user behaviour at this stage?
Step 3: Retention
The retention stage of a customer journey involves looking at two different segments: those who continue to make transactions and those that stop.
It’s essential to avoid the mistake of neglecting people once they become your customers. At this stage, focus on how you can continue to develop and build on the relationship. Aim to increase brand loyalty to ensure brand growth remains stable. It’s much easier to retain a customer than to acquire a new one, so be careful not to overlook this step. Email marketing comes into its element at this stage in the customer journey.
It’s equally important to explore and analyse the reasons a customer is no longer your customer. Some churn is inevitable, but make sure you use it as an opportunity to learn more about your audience’s wants and needs.
The most important thing for growth is making sure your churn rate is lower than your acquisition rate.
Key questions to ask:
- What is your churn rate?
- What is the average retention time?
- What communication opportunities do you have with customers?
- How can you provide additional value to active customers?
Step 4: Referral
Once you have a loyal customer who is a brand advocate, the snowball effect starts. There’s a massive opportunity for growth from those who love your brand and will naturally want to introduce others to it.
Referral includes completely organic activity, like your customer raving about you to a friend in the pub. But it’s also important to make this part of the process more effective by making sharing and referral as easy as possible. Referral tactics are common and include an incentive to help encourage the behaviour.
Key questions to ask:
- How would a customer share information on your brand?
- What can you offer a customer to encourage referral?
- What can you offer prospective customers to encourage referral uptake?
- On what channel or platform could referrals occur?
Step 5: Revenue
If steps 1-4 are done right, then there should already be a positive impact on revenue. However, as with any startup, the focus on ROI is always where the attention is.
The way to continue seeing revenue increase is by making two metrics as efficient as possible: Customer Acquisition Cost (CAC) and Customer Lifetime Value (CLV). Bringing it back to a performance-focused strategy optimised towards these two measurements of cost efficiency is the way to maximise growth.
Key questions to ask:
- What is your historical and current CAC?
- What is your historical and current CLV?
- Which audience segments have the best CAC and CLV?
- What marketing channels have the best CAC?
Concluding Comments
Putting the AARRR framework into practice may take time. It’s not something that can be implemented and perfected immediately. Tackle and optimise each step thoroughly, focusing on key performance metrics for every stage and gear your strategy towards them. Remember to agree on a measurement and set a target upfront to learn from any changes or tests you do.
The most effective approach to growth involves defining your goals, validating the channels that work, and then doubling down on those that do. By applying this logic, you’ll keep efficiency at the heart of your efforts and set yourself on that upward trajectory.
Tristan Gillen has worked with over 50 startups in the last few years in a variety of capacities: as a founder, on the founding team, as a consultant or with his current growth marketing agency Growth Division. Growth Division helps startups find and validate channels to market through their community of growth experts. He also has recently started a coworking space in Budapest, where he now lives, called CoWork Division.
