Use the Classic AARRR Funnel
It's time to learn about the AARRR funnel that you read about in the first part. Now let's look at how to use it and learn about which objectives to focus on first.
The AARRR framework lists all of the lifecycle stages of your customer's interaction with your business. It's presented in the form of a funnel, and sometimes also called a tunnel.
This is what it looks like:
Acquisition: attract people to your site or application.
Activation: convincepeople that you're made for them.
Retention: getpeople to stay or come back at the proper time.
Revenue: getpeople to buy.
Referral/Recommendation: getpeople to recommend your product or service.
Depending on your business model or your company's lifecycle stage, the steps may not be quite the same.
For example, at the beginning of your startup, your product is not yet available, but you're launching a landing page intended to present your offer and collect email addresses from interested parties. At this stage, you have no reason or even means to keep them on your website. Your funnel would then be simplified and look like this: acquisition > activation > referral.
Modify Your Funnel According To Your Priorities
There are two ways to read the AARRR. They are distinguished to help you understand how to prioritize your actions better:
One is user-centered.
The other is entrepreneur-centered to measure the priorities properly.
The User Point of View
You have more people visiting your website than people recommending your service. Therefore, you can arrive at this chronological order from the user point of view:
The Company Point of View
When you visualize a theater scene, you have what's happening on the front of the stage, the spectator side, and behind the curtains. All of this preparation behind the scenes enables the spectator to have a nice time.
In the same way, you must make sure that your efforts are focused in the right places so that your customer has an enjoyable time during the various interactions with your company.
In this second part of the course, we're going to discuss these steps in chronological order, and from the user point of view.
However, the priority in which you should work on improving each stage does not have to be different technically. Here is how they should, in theory, be prioritized (and no longer chronologically for the customer):
Why is it different? We'll illustrate with an example.
If you attract many users to your website or online platform, but the site is malfunctioning (registration problem, 404 error, or problems on the payment page), your customers may show up but quickly leave. Your users will not (or hardly ever) return after a bad experience.
First of all, you'll concentrate more on retention by ensuring your users' complete satisfaction at each stage of the customer journey than on the acquisition. The acquisition will come at a second phase when you have ensured a high retention level.
About the referral: If your first users recommend your product, they are satisfied. You can then focus on a massive acquisition.
Finally, if revenue is the last place, it's because it should not be your priority. It'll come if the previous steps have been successful.
On different customer projects, I've seen the mistakes associated with the mismanagement of priorities of this AARRR funnel:
A client in HR wanted to inflate the acquisition figures to prove market traction. We had a lot of users, but none were satisfied with the product.
It was a serious mistake: We had an acquisition and activation that worked, but it was impossible to keep customers on the platform because they saw no interest; the product wasn't good enough.
The AARRR funnel contains five steps representing interactions between your customers and your business: acquisition, activation, retention, revenue, and referral.
You probably shouldn't start by focusing your actions on acquisition. Get retention and activation, and even referrals running smoothly first, before working on acquisition.
Now that you have a good overview of the AARRR framework, we'll go into the details of each of the parts comprising it, back in the chronological order.