Dave McClure’s Startup Metrics for Pirates AARRR framework provides a useful tool to define, track, and optimize conversion through your products macro-funnel. Over the years I’ve applied this framework and adapted it into what I call Pirate Metrics 2.0.
The AAAHAR Macro-Funnel
Acquisition – first visit
Activation – first enjoyable experience
Aha Moment – formed a sticky habit in X days
Retention – kept coming back
Introducing Captain Hook
Forming a sticky habit with new users, aka your products ‘Aha moment,’ is paramount to the success of your product. In the AARRR model users convert from activation (had an enjoyable first experience) to retention (kept coming back). But in reality users don’t form a sticky habit as soon as they have an enjoyable first experience hence Aha moment conversion is not synonymous with activation conversion. By introducing Aha moment as a Macro-Funnel step your product can more effectively answer and optimize for: What leads users to their first enjoyable experience?What leads users to form a habit in the first X days?
Breaking out external triggers based on their Macro-Funnel conversion goal
AARRR also simplifies tracking and optimization of external triggers (email and push notifications), grouping them together as tactics to keep activated users coming back. But external triggers can equally be effective in converting activated users to form a habit, and in some cases even bring back acquired users who didn’t quite reach an enjoyable experience. By breaking these out based on their conversion goal (Activation, Aha moment, or Retention) your product can more effectively optimize external trigger tactics based on the stage in a users life, and thus more effectively optimize Macro-Funnel conversions at each step.
Breaking out the Growth Loop from the Macro-Funnel
In AARRR the key metric for growth is the percentage of acquired users who referred your product. Though this is a useful metric and worth tracking, effective growth is much less a funnel as it is a loop: a percentage of users take an action that leads to a certain number of impressions on growth channels, a percentage of users who see these impressions click-through, a certain percentage of those then take an action that leads to impressions, and so on and so on. Growth Loops are also reasonably independent to your Macro-Funnel: a user at any stage (even pre-activated users) can take an action that leads to impressions on growth channels. For example finding an article and immediately sharing it to a friend before you’ve even read it, never to return to that site again. Furthermore product referral is just one type of Growth Loop, so instead of defining a Growth Loop like SEO as linear (as is the case in AARRR) it’s useful to track and optimize these as loops. By breaking out the Growth Loop your product can more effectively optimize each step of the Growth Loop as well as answer and optimize for: What leads one cohort of users to take an action that leads to another cohort of users?
When I meet people and mention I work in Growth, I'm more often than not asked for tactics (aka 'growth hacks').
So on the surface, it seems the best Growth Hackers are magic fairies possessing a (secret) bag of the most artful hacks.
Tactics are fun to think about but in reality there’s a list of tactics and a handful of ways any product can grow.
Growth arbitrage is today further ‘up the stack.’ The best Growth Hackers are Priority Hackers. They focus on priority over tactics, leveraging data to identify and prioritize highest ROI projects.
Fred Wilson recently wrote a post titled “Growth vs. Retention” in which he talks about the importance of finding product-market fit before trying to scale acquisition. It’s an invaluable point for startups.
Product-market fit is hard. It’s hard to know how to benchmark it. It’s hard to know you’ve achieved it. It’s hard to know that it will scale. You can reach product-market fit with great retention amongst a small subset of users in a large addressable market and still fail at crossing the chasm or growing at a rate expected from fast-growth tech companies.
The lesson still holds water: don’t waste time or money burning through your market and pouring water into a leaky bucket. But even if you seem to have product-market fit, a lot of the risk in a startup today is in distribution.
Instead of thinking about Growth and Retention (or product-market fit) as mutually exclusive I think about them as one of the same: a shared experience loop that effectively leads one user to bring another into your product AND keeps them coming back.
what leads to product-market fit is the same as what leads to growth: meaningful, unique, and frictionless shared experience loops. Figure out one effective unique shared experience loop and you can solve for retention and growth from day dot.
In "Hooked: How to Build Habit-Forming Products“, Nir Eyal provides a useful model for how habits are formed with products:
External Triggers are stimuli in the users environment triggering them to open an App. Internal Triggers are triggers that stem internally without any external stimuli, such as a feeling or desire.
A take-away from Nir’s book for me: the closer your external triggers mimic your users internal triggers, the more likely they are to form a habit through associating your product as an immediate outlet for those internal triggers. Push notifications and other external triggers should be informed by and built around your users strongest and most valuable internal triggers.
It’s no secret people have grown to dislike push notifications. Today’s services inundate us all day with notifications asking us to respond. In this environment, persuading a user to accept let alone respond to notifications is a certain holy grail.
I’ve been thinking about this in the context of Minimum Viable Product. MVP is a useful exercise in thinking about and testing a set of features that you think are just viable enough to validate problem-solution and product-market fit. The MVP framework is useful but I am in the camp that there is more risk in forming a sticky habit than there is in finding product-market fit. So I asked myself: What minimum viable push notifications will users accept and respond to? This question encourages you to identify and empathize with not just the problems your market encounters, but the recurring internal triggers related to these that will help you form a habit and keep them coming back to your product time again. What are your markets strongest and most valuable internal triggers? How does this shape your external triggers? Equally, your overall product experience? What is your products Minimum Viable Push?