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Growth Hacking 001: AARRR

Growth Hacking is one of the most popular concepts in the digital world of today. That is why, as is the case with other popular concepts, there is a lot of infollution about growth hacking. We easily become growth hackers and construct our own theories about growth hacking. The biggest harm done by this infollution is to the startups who are trying to build something with limited resources, those who really need growth hacking. In this article, I will start out by discussing a fundamental model for growth hacking, named “AARRR”.

AARRR is a model that was first introduced by Dave McClure.  With this model, we divide the lifecycle of a user in an average internet startup into five sections. Let’s take a look at what they are:

1. How can you attract potential users to your site?
2. How can we activate the incoming visitors?
3. How can we make sure the users will revisit?
4. How can we acquire new users through our existent users?
5. How can we benefit from our users?

What do we discover when we ask ourselves these questions? What we need to have a successful startup is way beyond “more traffic”. Getting “more traffic” is not the same thing as “growth”, or “hacking” through free or organic channels. We might feel good about our success if we use the first definition initially, but on the long run, it would hinder the startup’s overall success. In order to take a look at the big picture for your startup, you need to evaulate these five intrinsically linked questions and to execute your plan within the boundaries of the main goal that is established by them. Let’s discuss these in detail:

AARRR - Growth Hacking
1. Acquisition: How can you attract potential users to your site?

Whenever this topic is discussed, channels and tactics are brought up. But before you focus on the tactical plans, there are plenty of other topics that need to be addressed on the business end of your startup. Who is your product for? Who are the customers you want to reach? What are the online world views, habits, motivations and other parameters that your customers adhere to? Trying to focus on and work with channels before answering these questions is no different than getting on a random bus on your morning commute. Sure, you will get somewhere, but you probably won’t be happy about it.

After getting to know your target audience, you can move on to work with channels. These consist of social media, search engines, SEM work, e-mailing, PR, your blog or any offline projects you are planning. The performance of these channels may vary, some might be more effective than others, but that does not mean you should focus on just one. Research indicates that multiple channels are the most effective in user acquisition. (For more information about this, take a look at my article titled The Journey of User Acquisition)

When you begin working on channels, that is where tactical work becomes important. Today, it is impossible to achieve anything on social media, without social media optimization. If you do not test your texts and titles thoroughly, your SEM results will not be satisfactory. Every channel has its own tactical properties that need to be considered. While working on a particular channel, it is important to pay attention to these tactical points.

After achieving tactical success, the next step is the ability to correctly monitor and measure the work you have put in. In order to correctly measure it, you should be using your analysis tools correctly and efficiently. (You can read our current and upcoming articles on Google Analytics by clicking here.) As part of the lean approach, the performance of your efforts should always be improved. (Statistical manipulations should be watched out for when it comes to performance improvement. I have a lot to say about this issue and will update the links when I do so).

2. Activation: How can we activate the incoming visitors?

In the most basic sense, the window of a shop is what corresponds to the idea of the landing page in the online world. After determining your target audience, you have managed to acquire your users through activities on different channels and they came to your site. Now it’s time to motivate the user to use your product and to give them a good experience.

In order to create that motivation in your users, you need to focus on the landing page. Landing pages are extremely critical in terms of their content and design, down to every single world you put in them. They can dramatically change the motivation of your target audience, as well as what steps you might need for your product. A practise that is highly efficient for one product, may not be as practical for you. You should test your performance by constantly testing different aspects. You can also create different landing pages for different customer segments or channels.

Landing Page

Landing Page Tests Can Be Quite Effective. A good example: Basecamp

If you are unable to provide your users with a good experience the first time, then all your activities so far have been in vain. Therefore, it is extremely important how you greet your users. You can take a look at my articles on Onboarding by clicking here. I recommend thoroughly researching and working on this.

Note: I also recommend reading the article titled Suggestions to collect e-mail data from landing pages.
Note 2: Another recommended reading material before starting on landing page tests is my article on Introduction to Cohort Analysis for Internet Startups.

3. Retention: How can we make sure the users will revisit?

Retention Emails

Academia is an extremely successful example in terms of Retention E-mails

Generally speaking, the next step for contacting your users after the initial greeting, is e-mail. You should be able to repeatedly attract your users to your product by e-mail. But there is one thing you should consider before sending numerous e-mails: We all receive hundreds of e-mails each day. How can you stand out amongst all those e-mails, capture the users’ attention and get ahead? Why should the users read the e-mail and revisit? The initial experience that you offer with your product needs to continue with the e-mail. Before you start e-mailing for retention, I highly recommend reading my article on  ‘Emailing as a secret weapon for engagement’ .

4. Referral: How can we acquire new users through our existent users?

As internet entrepreneurs, there are some abbreviations that we can’t help but love. One of them is CPA, which stands for cost per acquisition, which means how much you spend to get a single user. Users that you acquire through invites are extremely vital to your CPA, and in turn, your startup. But what do you need to do for invite scenarios?

dropbox-referrals

Dropbox is a good example of what a successful invite scenario should be

Invitation should be super simple for the users. You should make it really easy for them to invite their friends, by offering readymade messages or e-mail templates, or easy-sharing functions through social media. Usually a reward or benefit is needed for a user to invite their friends – but it does not necessarily have to be a discount or free usage. Depending on the product experience, many different invite scenarios can be generated. I recommend reading my article titled How Does Kickstarter Expand Its User Base Through Social Media?  for more information.

Important note: In order for an invite scenario to work, the only and mandatory thing that is needed is happy customers. If your customers are not happy with your product, you should direct all your efforts towards pleasing them first,  before doing anything on invitation scenarios.

5. Revenue: How can we benefit from our users?

And now for the shortest part: Money! Pricing is one of the biggest handicaps for internet startups. It is really hard to hypothesize and test. With that in mind, the best route would be to get feedback from those who fit into your target audience (the best test is a closed sale, afterall). Other than that, there are a few points you should pay attention to:

As you are starting out with your project, try to refrain from projects that are supported by commercials. Generating active revenue for your project through commercials is actually harder than you think.

Do not leave your product on its own – try to generate side products, mini offers that will address the main issue you are resolving for your customers. After you acquire a user, it is easier to increase your revenue through cross sales than trying to sell a product to brand new customers for the first time.

Do not consider pricing for yourself only. Consider who can work with your product – you can always construct profitable models for different business alliances.

To sum up, AARRR basically maps out the lifecycles of your users in broader strokes. If we are using the word “Growth” for an internet startup, it is impossible and very misguiding to try and measure that by incoming traffic. When we say growth, we should be considering the five parameters offered by AARRR. Missing even one of those parameters means misguidedness in terms of growth.

As you may have seen, you need to unite multiple disciplines to fully optimize the AARRR process. If you manage to do so and get an efficient result, then we can talk about “hacking”. Using a source free or organically does not mean you are “hacking” anything.

You must also bear in mind that this is a team effort. No one can wave a magic wand to miraculously transform your startup into something that reaches to millions of people. The road to success for each startup is actually longer than you think, and it involves a lot of trial and error. If you are unable to swiftly integrate and react to such changes as a team, then even the best growth hacker in the world cannot help you.

Basically, just because the work you do is on the intenet, that does not invalidate the rules of doing business. Try to see the big picture and avoid infollution as much as you can. I do not recommend taking any action as to the “how”, before you decide on the “what” and “why”.

For more information about AARRR:

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