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Published on 26 Feb 2021

Pirate metrics - introduction (part 1 of 7)

Grzegorz

This is a first article in a series about pirate metrics.

As a sales and marketing executive in the development industry, I look at software from two different perspectives. One is engineering, and the other - commercialization of products. While the engineering part is obvious (a product has to be developed to exist), the commercial side is not that obvious and often not well understood.

That's why I decided to delve into pirate metrics - one of the most comprehensive and best ways of looking at your product’s sales and marketing parameters. 

The term itself was coined by Dave McClure to make a product user’s lifecycle more digestible and break it down to the key indicators worth tracking.

Below I go through the basics and will be diving deeper into individual parameters over the next few weeks in bite-size posts. 

AARRR

The term pirate metrics is derived from the acronym AARRR that stands for:

  • acquisition

  • activation

  • retention

  • revenue

  • referral 

(Incidentally, AARRR is also the supposed battle-cry of silverscreen pirates, thus the name - pirate metrics. )

Acquisition

Acquisition, the very first element in a user lifecycle, boils down to installing an app or visiting a website. New users can be acquired in two main ways: organically and inorganically. Organic acquisition is free (or - to be precise - is paid for indirectly) and can come from social media, app store optimization, SEO, content marketing. Inorganic acquisition is achieved through paid advertising.

Activation

Acquiring a user feels great but it’s merely the first step. Now it’s time to show the true value of the product and make sure it will be actively used. In case of an application it means registering and using at least some of the product's functionalities - playing a song, ordering pizza or making a bank transfer (whatever the app is designed to do).

Retention

The digital product industry is competitive. Only a quarter of apps installed on a phone are used daily. A large percentage of them get uninstalled or forgotten in less than a week. So if your churn is high (a lot of uninstalls compared to downloads), this means a lot of money spent on acquisition is wasted. That’s why retention is so important. 

Revenue

Once you retain your user you need to move on to the next level. Because like a true pirate, you want some gold! It is likely that your product can be used for free with limited features or for a limited period, but the challenge is to have your users spend their money. It’s the ultimate goal that pays for the development, increases the value of the company and pays your wages.

Referral 

The final, and one of the most rewarding stages in the user lifecycle, is referral. The moment your users tell their friends, family and colleagues about your application or service does not only indicate further revenue, but is also gratifying on a personal level. Referrals mean you’ve done a great job and made an impact.

I will be talking about pirate metrics in more detail in upcoming posts. Stay tuned.

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Adrian
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