How to use the Pirate Framework to analyze Marketing campaigns

The Pirate Framework is one of the most popular models for Start-ups and SaaS companies to measure growth and success. It was introduced by David McClure, founder of Practical Venture Capital, and is also known as AARRR framework.

I usually use AARRR framework to dig into data and interpret my analysis in Marketing campaigns because this framework reflects Business Objectives of our campaigns: acquisition, activation, retention và referral.

An introduction to the Pirate (AARRR) framework

AARRR stands for Acquisition, Activation, Retention, Referral and Revenue. AARRR enables you to measure and optimize every phase of user funnels by optimizing it through insane focus on one metric at a time. AARRR is widely accepted as the most important metrics for a startup to focus on. That is because these metrics effectively measure your company’s growth while at the same time being simple and actionable.

The AARRR framework consists of five phases a user goes through in order to achieve growth and each phase has it’s own set of metrics to focus on.

The five phases of AARRR

The five phases of AARRR

The framework and how to apply this framework to Marketing Campaigns

The framework is consists of five successive phases, each with their own set of metrics and the OMTM. The OMTM (One Metric That Matters) is the metric that get’s your full attention within a phase for a specific time. It’s also the metric that’s most important to your learnings regarding the phase you’re in. The OMTM is ideal for getting your team onboard, since they only need to focus one this one metric. All other metrics in a phase of the framework contribute to this OMTM.

1. Acquisition — “Where Are Our Users / Users Coming From?”

The One Metric That Matters is to grow the number of users, because this is the best indicator for people visiting your website/ apps. It’s a measurable result of targeting the right audience with messages in your marketing channels and contents.
Other metrics for this phase could be:

• Click-Though Rate (CTR)
• The number and portion of new users
• The number and portion of traffic from various channels (on-site, paid ads, organic…)

Some of fundamental questions you want to be asking yourself about your acquisition:

• What channel is driving the most traffic (#)?
• What channel is driving the most valuable traffic, in other words, performs best (%) in terms of customer conversion?
• What channel has the lowest customer acquisition cost ($), i.e. cost per customer converted?
• What is the virality of campaigns? What is performance of viral mechanisms such as likes, shares, comments?

2. Activation — “How good is the user’s / customer’s first experience/ payment?”

The One Metric That Matters is the number of users that make their first transaction, because this is the best indicator for people having a successful onboarding process and good experiment at our services.

Other metrics for this phase could be:

• Conversion rate from visiting to user/ transaction
• Cost per new user (CAC)/ cost per transaction

Some of fundamental questions you want to be asking yourself about your activation

• What “aha moment’ or triggers lead users to make their the first payment?
• Which channel does have the best conversion rate?
• How can we increase the activation efficiency?
• What is the activation cost (CAC)?

3. Retention — “How many of users are you retaining and how many of churned users are you recalling?”

In the retention phase the One Metric That Matters is the retention rate, because this is the best indicator for people coming back to your app month after month. This is a measurable result for users that experience enough value to come back to your application. Other metrics for this phase could be:

• The number of retain users that campaigns reach out
• The number of churned users that campaigns recall

Some of fundamental questions you want to be asking yourself about your retention;

• What “aha moment’ or triggers do retain or recall users?
• How can we increase the retention efficiency?
• Which channel is the best to re-engage churn users?
• What is the retention cost?

4. Referral — “How can you turn your current users into your advocates?”

The One Metric That Matters is the number of referees through referral, because this is a measurable result for users inviting others via the campaigns. Other metrics for this phase could be:

• Conversion rate from visiting campaigns to do referrals
• Number of referrers and referees
• Number of referees per referrer

Some of fundamental questions you want to be asking yourself about your referral:

• What “aha moment’ or triggers lead users to invite their friends?
• How can we increase the referral efficiency?
• Which channel is the best for users to invite their friends (Zalo, Facebook or Copy link?)
• What is the referral cost?

5. Cost Effectiveness, instead of Revenue

When working in the early stages of Start-up, the Revenue stream was quite small, I focused more on the cost effectiveness and achievement of the campaigns.

The One Metric That Matters is the CAC (cost acquisition user), because this is a measurable result for acquisition effectiveness. Other metrics for this phase could be:

• Conversion rate from visiting campaigns to do 1st payment
• Number of new users who make 1st payment
• Total spending of campaign

Some of fundamental questions you want to be asking yourself:

• How can we increase the cost efficiency?
• Which channel is the best regarding cost effectiveness? How can we scale it up?

Today, there are several frameworks to apply on your analytical works, using the framework that fits your business model best and focusing on the meaning of One Metric That Matters.