Before I get into Dave McClure’s take on actionable metrics, it’s important to first identify who your customer is. Customers are the people who pay you money and users/visitors are the people who utilize your product. Simple, no? It’s easy to confuse the two, but it’s an important distinction as you’ll be working to expand both markets in different ways.
Here are the basics on actionable metrics for expanding your knowledge of how users can become customers. Just think like a pirate and say “Aarrr.” Your goal is to get users through the funnel from activation to revenue with as little drop-off as possible.
- Acquisition: users come to site from various channels
- Activation: users enjoy 1st visit: "happy” experience
- Retention: users come back, visit site multiple times
- Referral: users like product enough to refer others
- Revenue: users conduct some monetization behavior (customers!)
Let’s consider AARRR from the framework of creating a new product you’re marketing on the web.
1: Acquisition. Here your goal is to get new users to your site. Use consistent branding and messaging as well as a bit of SEO/SEM to get people to your site. You can also use Google ad words or social media to drive traffic.
Now that you have people coming to your site, you need to get them moving. Activating users requires some sort of engagement and interaction between them and you. To do this you’ll need to create an amazing user experience that prompts them to stick around and click. Give them opportunities to register, vote, comment, request info, or like. Make it easy for your users to understand what you’re asking them to do, and what you offer. If you have time, create specific landing pages so you can A/B test the impact of your SEO efforts and UX.
After people are engaged with you and your site, you need to keep people coming back. How? Create a compelling UX and stream of information that makes people want to check back in on what you’re up to. It helps if you determine what you want them to do when they come back. A happy user will keep coming back, so identify where people are dropping off of your site and make sure to improve those elements. One important thing to keep in mind is that you should only drive referrals after users are having a good experience.
Now you’re getting into the viral stage. Ideally, you want your users to be so satisfied and intrigued, that they tell other people about you and your business. Make it easy for users to do this by utilizing social widgets like ShareThis or Gigya. They make it easy for users to email, share, like and spread the word about what you’re selling.
Finally, we get into the exciting world of bringing in cash. You can use ad revenue from Google AdWords or just converting users into paying customers via ecommerce platforms. Ideally, you want to have a sustainable solution that bring in predictable income streams. If you find that you have high retention, but low revenue, consider A/B testing your call to action, check your value proposition, and set up automatic emails prompting users to move on to become paying customers. If you’re still struggling, ease the process by having reduced functionality versions that users can try, explore freemium models, or standard 30 day trials.
Want more info on this?
Check out this PDF from the Computer Science department at the University of Washington.
Here's more info from Dave McClure's 500 Hats.