How to quickly and easily create Pirate Metrics to scale your startup
Pirate Metrics are the key measurements to monitor and optimize how you get and grow your customer base, that is, the data that demonstrates if your sales funnel is working as hard as it could be. It looks at how you get customers, what conversion journey they go on, how often they use your products, how much they get their friends to join you, and ultimately how much money they spend on your. Pirate Metrics should be set up as a simple, top-line dashboard, looked at weekly, which gives you a high level view of your customer growth strategy, and enable you to make quick decisions to optimise the funnel. Keep it simple.
Outcomes of a Pirate Metric Dashboard
- High-level overview of your growth and sales funnel to help you make quick, informed decisions
- Information about what your customers are / are not doing
- Diagnostics of marketing and website issues, signposting issues, unhappy customers
- Informed decisions on how to spend your budget
How Pirate Metrics work
The Pirate comes from the acronym of AARRR (which is the sound all respectable Pirates make - obviously). It shows the five stages of customer conversion;
- Acquisition: Number of customers taking an action that indicates they are interested in buying your product
- Activation: Percentage or number of these users who have “converted” (bought / signed up / downloaded)
- Retention: How often these people are engaging with, or using your product (site visits, app uses, repurchases, engagements)
- Referral: how many new customers / potential customers your existing customer-base drive to you
- Revenue: How much money you are making by number of paying customers, revenue per customer
Creating your dashboard
Everyone will have a different dashboards; you may want to make one in Google, MixPanel, or a simple .XLS. Your dashboard should include a day-by-day, week-by-week or month-by-month overview of the following metrics;
Acquisition: The Number of customers taking an action that indicates they are interested in your product. There are two types of acquisition metrics;
- Landed Acquisition: the number of people who land on your page / app store / visit your shop. This indicates the success of your marketing. This shows your marketing is getting people through the front door (so to speak)
- Engaged Acquisition: the number of people who take the first step to purchasing your product or service. This shows commitment, and could be people signing up for a newsletter, downloading your app, sign up for a freemium model, requesting a Demo, a meeting, starting the sales process
Activation: The percentage or number of users who have “converted” (bought / signed up / downloaded). This can be cash-based, or if you are not focusing on revenue, then this could your core metric (e,g, created an account, downloaded a report)
- Simply, this is the number of people who have done the action you want them to, and which is a key metric to growing your business
- Don’t be afraid of having more than one key stage. E.g. Tried freemium > subscribed > upgraded
Retention: How often these people are engaging with your purchased product (site visits, app uses, repurchases, engagements). You have your customers, but are they using and liking your product? What do you think (initially) are the metrics which indicate people are loving and happy with your product? It could be
- Frequency of engagement (how many times a day / week / month they use you)
- Number of log-ins / uses
- Visits to your store
Referral: how many new customers / potential customers your existing customer base drive to you?
Word of mouth and Member-get-Member are the most cost-effective sure-fire ways to get new customers at low cost. High referral rates means your customers see value in your product. low referral rates means you need to be working harder on your product! Two metrics to consider are
- How many visits did your customers bring to your site / page / shop?
- How many engaged acquisitions / Activations did they bring you?
Revenue: How much money you are making by number of paying customers, revenue per customer. Simple right? The idea of having Revenue last is that you can quickly see the impact each other Pirate stage has on the bottom line. Dependent on your business you could have;
- Total revenue (per week / month / day)
- Average revenue per customer (tread carefully though so you don’t get a distorted view)
- Revenue per product
Finally; why couldn’t the pirate crew play cards? Because the captain was standing on the deck.