AARRR Customer Lifecycle Model

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Dave McCLure  gave a speech at Seattle Ignite where he introduced what he called his “AARRR” customer lifecycle model. The goal with this model is to illustrate the various segments of the funnel that a business must acknowledge and master.  The 5 stages are as follows:

1. Acquisition – Think about how you’re obtaining those initial customer introductions. Typical methods would include SEO, PPC, Press Releases,  etc. This is an area that can be improved upon with marketing optimization techniques such as SEO keyword targeting, etc.

2. Activation – Once you have people at your site, what could you do to better improve their experience and ensure they actually signup for your free trial?  A/B testing and landing page optimization can be helpful here.

3. Retention – Once the user is signed up, what are you doing to incubate those relationships?  Many email marketing houses now provide fairly sophisticated auto-responder options.  Marketing automation programs can take it to the next level. Inbound marketing such as blog content and Facebook fan pages can further the cause.

4. Referral – What are you doing to assist your existing users to spread the word about your business? Contests, badges and widgets they can put on their website all help incentivize them to spread the word, which reduces acquisition costs.

5. Revenue – Finally at some point, there must be a monetizable transaction that justifies all of the effort.  Think about what it is and what could flow naturally given the above statements. A typical example would be a SaaS product that provided a free trial in the activation segment of the funnel, and when the 30 day trial is up, or when the user needs additional functionality, they choose to signup.

At the end of his presentation,  he suggests your business needs to be instrumented with the proper analytics and intelligence by which to make decisions.  Suggests you need a tool for each of the following purposes:

  • Quantitative – Traffic analysis & user engagement
  • Qualitative – Usability Testing & Session monitoring
  • Comparative – A/B & Multivariate Testing
  • Competitive – Monitoring & Tracking competitors

Here is the slideshow for anyone interested in further detail: