AARRR pirate metrics

What it means

AARRR is a metrics framework that splits the customer journey into five stages: acquisition, activation, retention, referral and revenue. Because of how the acronym sounds it is also called pirate metrics, and it was created for startups that needed a simple way to measure growth.

For each stage a company picks one or two indicators, such as sign-ups, the share of people who actually start using the product, the churn rate or revenue per customer. Together they form a funnel that shows where people drop out.

The framework complements a single North Star metric. While that shows the overall direction, AARRR helps find the specific bottleneck worth focusing effort on.

How it works in practice

A typical finding is that a company spends most of its budget on acquiring new people while the biggest losses happen in activation or retention. Improving onboarding or the first impression then pays off more than another campaign and lowers the customer acquisition cost.

The referral stage is supported by a referral programme and the revenue stage by upselling or subscriptions. For subscription services the result is compared with customer lifetime value.

Accounting and advisory firms can use the framework without an app: acquisition is an enquiry from the website, activation is signing the contract and handing over the first documents, retention is renewing the engagement, and referral is new clients introduced by existing ones.

What to watch out for

Metrics are only useful when they are defined unambiguously and measured the same way over time. If the definition of activation changes every quarter, the numbers cannot be compared and decisions rest on sand.

Measurement must respect cookie and personal data rules. Detailed tracking of visitors without consent can lead to fines, so aggregated data and first-party data are the safer basis.