Pirate Metrics: Explore what the AARRR metric means

Optimizing Growth

Pirate Metrics (AARRR)

Product-led companies, often technology companies, sometimes use what have been called Pirate Metrics to optimize growth. It works by getting the company to focus on improving specific stages of a customer’s journey with your product.

This page looks at what Pirate Metrics are and how to use them to focus the efforts of your teams on accelerating the growth of your company.

What Are Pirate Metrics?

Pirate Metrics are what have also been called AARRR was a term created by a well known early-stage tech investor called Dave McClure in 2007. AARRR stands for: Acquisition, Activation, Retention, Referral, and Revenue.

Each stage is designed to provide investors and founders a way to focus on improving the key levers that accelerate the growth of product-led tech companies, With each of the levers having a set of metrics that could be tracked in order to assess the health of each stage and the company.

Once a company has a baseline for each metric, teams can be given the task of working on how to improve them. OKR then being used to plan and manage these improvements.

Why OKRs? Because OKR planning usually starts with questions like: what do we need to make progress on most and why? The metrics being tracked are a good way to focus that conversation and then operationalize the changes that would need to happen.

Adding Awareness As An Extra A – AAARRR

You often find AAARRR being used as well with the extra ‘A’ standing for Awareness. The case for this is based on raising awareness and recall is a key stage before acquisition moments happen. However this stage is optional.

Awareness - creating brand and solution awareness and recall
Acquisition - the acquisition of new trials
Activation - the conversion of a trial to a customer
Retention - the retention of a customer
Referral - the optimization of a customers ability to refer others to you
Revenue - the growth in customer revenue

How To Operationalize Pirate Metrics

To maximize the growth of a business you need goal and executional plan clarity, and transparency. You also want accountability and the ability to know where problems need to be solved.

This again is why OKRs are a great fit. OKRs create a business rhythm via set planning period, usually, quarters and regular check-ins, usually weekly. Teams are accountable for their OKRs and progress is current and accurate and Red, Amber, Green (RAG) statuses alert everyone to areas of risk or low confidence.

A good way to think about the structure of Pirate Metrics or AARRR is this.

Mission

To become the world’s leading strategy, goal
and culture management software platform.

Revenue

Grow Revenue by X% Y-on-Y
Grow ARPA by X%

Strategic Intent

Customer Journey Optimization

Acquisition

Max New Trials

Activation

Trial to Customers

Retention

Retain Customers

Referral

Maximize Referrals

KPIs

Sales & Marketing
KPIs

OKRs

What We Need To Make Progress On Most

KPIs

Sign-ups

Feature
Engagement

Aha Moment

Trial: Customer %

OKRs

What We Need To Make Progress On Most

KPIs

Users

Usage

Value

Churn

OKRs

What We Need To Make Progress On Most

KPIs

Internal
Intros

External Intros

Content Shares

OKRs

What We Need To Make Progress On Most

Each of these stages has a set of KPIs to track against them that can be tracked in ZOKRI.

Now write OKRs and align them by asking teams to consider how best to improve the KPI in these categories by addressing what we need to make progress on most right now. Perhaps it’s:

A feature you don’t have competitors do
A major issues being faced that are holding you back
Something that is performing badly
A processes that is not working properly
An opportunities that is being missed
A core capabilities and competencies you need to have

By making progress on the OKRs created you should expect the KPIs under these heading to improve.

Pirate Metrics Don’t Replace Strategy

Strategy is the answer to ‘where are you going to play and how are you going to win?’. Of course optimizing a customer’s revenue journey is going to help that.

There are usually other pillars to a strategy as well. What about things like ‘People & Culture’ and ‘Operational Excellence’? These sort of themes are also often present as Strategic Pillars. These also need to have OKRs and KPIs.

For this reason, we’d recommend that you use Pirate Metrics as a Strategic Pillar that will support your Mission and Revenue Growth. Call this Strategic Pillar something like ‘Customer Journey Optimization’. Perhaps assign this pillar to a cross-functional team?

Mission

To become the world’s leading strategy, goal
and culture management software platform.

Revenue

Grow Revenue by X% Y-on-Y
Grow ARPA by X%

Strategic Pillar

Customer Journey Optimization
(Pirate Metrics
AAARRR)

Strategic Pillar

People
& Culture

Strategic Pillar

Operational
Excellence

With the guidance of our OKR consultants, OKRs and KPIs can then sit below these Strategic Pillars in ZOKRI, allowing you to fully operationalize and systemize your growth.

Summary

Pirate Metrics or AARRR are a good way of focusing teams on the optimization of a customer revenue journey.
AARRR works well with KPIs and OKRs, both giving you the frameworks to operationalize and systemize growth.
AARRR does not replace strategy and you should ensure strategic planning is also carried out.
ZOKRI can platform AARRR, OKRs, KPIs and your broader strategy planning and keep teams aligned.

What Are Pirate Metrics?

Adding Awareness As An Extra A – AAARRR

How To Operationalize Pirate Metrics

Pirate Metrics Don’t Replace Strategy

Summary

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