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April 22

The effectiveness of the marketing funnel AARRR

From Sandbox
AARRR stand for:

• Acquisition.
• Activation.
• Retention.
• Revenue.
• Referral.

AARRR (also called the Pirate Metrics) describes the sales funnel. At the top of the funnel are visitors who only saw your application, or just downloaded it and still do not know how they will interact with it. Next, visitors are registered — of course, if it is provided by the functionality of the application.

Now they (you can start calling them users) reach the moment when they have to understand the value of the product and decide to remain its user, i.e. start buying some services, recommend the application to your friends and, in general, constantly return to the application for any purpose, or delete it from mobile device.

You will not have another chance to impress the user!

The AARRR framework forces developers to measure their sales funnel numerically. At every stage.

1. Acquisition

At this stage it is important to understand where visitors come from. In fact, the vast majority of installations fall on installations from the Apple Store or Google Play (there are, of course, the Amazon Appstore, Samsung Galaxy Apps, etc.). It is important for you to know how they get there:

  • advertising on Facebook or Instagram
  • contextual advertising on Google or any other search network
  • search in Google or another search network
  • search in Apple Store or Google Play
  • and many other marketing channels.

It is logical that each channel has its main indicators of efficiency.

A Facebook ad has the following key metrics:

  • CPC — cost per click
  • CTR — click through rate
  • CPM — cost per 1000 impressions
  • Relevance score
  • Cost per registration
  • ROI

Very important, in my opinion, is Registrations / Downloads metric — It shows the number of registered people after installing the application. Not all visitors will reach the end of registration: someone does not want to enter their personal data, someone just too lazy, and so on.

I recommend setting up a separate funnel for registration, in order to understand how many people leave at each of the registration steps.

We have a set of metrics, however, this is just the beginning. Based on these metrics, it is necessary to constantly test hypotheses that will improve these indicators.

For example, start with this:

  • CTR — place various banners and do their A/B testing;
  • Registrations/Downloads — as simple as possible to register for access to the basic functionality of the application; divide registration into several stages.

Immediately after registration, the user should feel the benefits of the application, because he came for a solution to a specific problem.

2. Activation

When does the user understand the value of the application? Consider this on the example of the application «X» to get acquainted with the techniques of meditation.

The first task of the product owner is for the user to understand as early as possible what advantages meditation will give him. The best way to convey this to the user is animation, where a typical representative of the target audience is shown along with his fears, anxieties, hopes. We show him what he can achieve using this application.

Let's analyze the ratio of all users, to users who have watched the video to the end. Perhaps you should change the user's avatar? Or show different videos to different sexes?

Think about the possibility of personalization!

We live in a dynamic world, and the lack of free time is a big problem. The application takes this into account and provides several programs of different timings to choose from. For example, 5-10-15 minutes. Analyze which of these timings is most used. Are there any changes in the choice of timing by the same user depending on the time of day, the stage of the course?

This will help you in the future to immediately offer users the most relevant offers!

Thus, users realized that meditation is simple, useful, and generally great. However, they did not buy anything, because our application uses a freemium business model, in which the basic features are completely free.

The application should be profitable! Therefore, we need the next step — the return of users to the application.

3. Retention

How to make users return to the app, make a purchase and/or recommend the app to their friends?
To do this, there is an excellent tool — push-notifications. You need to use it. For example, the user will see the following notifications:

  • Yesterday at this time you took the time to meditate. Why not to do it again?
  • We have something new for you!
  • You have not entered the application for several days. Remember — regularity is the key to success!

What should be measured:

  • Subscribed/requested — people allowed push notifications/all those who were shown requests to turn on notifications.
  • Opened/sent — how many people have opened push notifications/all those to whom they were sent.
  • Retention rate — how many people (as a percentage) use the application one, seven and thirty days after registration. This is a very important metric!
  • Stickiness — how many days in a row users use the app. For example, 15% of people use the app 7 days a week.

There are several ways to improve these indicators:

  • Ask people about their readiness to allow push notifications not immediately after the first entry into the application, but after the first meditation;
  • conduct A/B testing of push notification texts
  • conduct A/B testing of the time for sending push notifications.

Remember, it’s not enough for you to bring people into the application and show them the benefits — you need to make sure that the user is happy to pay for the advanced features of the application.

4. Revenue.
The mobile application «X» for meditation provides the user with the basic features for free, and earnings are achieved by providing additional features:

  • additional/extended meditation lessons;
  • an opportunity to ask a personal tutor a question;
  • online support;
  • remove advertising;
  • affiliate program (discounts on goods and services).

All this functionality is not sold separately, but as a whole and as part of a subscription.

In this case, first of all, you need to understand why a user bought a subscription. For example, the user needs the support or consultation of a specialist. Or, perhaps, he wants to receive an additional discount in stores from the affiliate program?

If we know that users buy a subscription because of some service, then we will do everything to make this service more popular. Remember, personalized offers are the most powerful monetization tool!

Usually in mobile applications, the following metrics are defined:

  • ARPI — average revenue per install;
  • ARPU — average revenue per user;
  • ARPPU – average revenue per paying user;
  • LTV – LifeTime Value.

5. Referral

A very important stage, we must always remember about the virality of the application. One user brings two new ones to the application — this is very cool, isn't it?

Great potential for growth is given if virality is organically built into the application. People can invite their friends to the ecosystem of the application in order to make the most of the available functionality. For example, to share your results, or a meditation schedule.

In our case, such viral functions are built into the application:

  • Recommend a meditation program (course) to a friend. For example, there is a special course that helps to manage the stress.
  • Ability to publish the results of the day / course in social networks.

One of the advantages of virality in the application is the possibility of increasing CAC (customer acquisition cost). If you attract a user for $ 2, then (if k = 1) the user will cost you $ 1.

Measure the coefficient of virality k and constantly think about how you can make the application more viral.

Conclusion

Let's be honest, everyone is interested in the question: «How to increase the income from the application?» There is no universal answer to this question! The goal of the Pirate Metrics framework is to get you to ask the right questions:

  • What are the steps in my sales funnel?
  • How is it possible to measure the effectiveness of these steps?
  • The most important thing! How to increase the effectiveness of these steps?

Study the growth potential of your application, do not be afraid to conduct experiments!
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