We learned that the new approach which was being suggested to us was known as Pirate Metrics. This had been popularized by Dave McClure, the founder of 500 Startups.
Basically the summary of Pirate Metrics is that as a business you need to focus on 5 Key Metrics:
- Acquisition - how well do you acquire customers/users
- Activation - how well do you get the new users to start using your product
- Retention - how well do you make the users come back to your product
- Referral - how well do users refer your product to others
- Revenue - how well do you monetize your users
In case you are wondering why these are called pirate metrics, then just look at the first letter of each metric. If you put them together, they form AARRR - which is kind of like the cry of a pirate :)
Pirate Metrics for Mobile Apps
For mobile apps, this is what the Pirate metrics look like and:
- Acquisition - how well does your app’s key idea convert potential users, into users who download your app
- Activation + Engagement - how many of the people who have downloaded the app, actually open the app and how long do they use it
- Retention - how long do they actively use your app, after how many days do they stop using your app or delete it
- Referral - how many users recommend the app to others or use in app invite functionality to invite their friends
- Revenue - how well does your app monetize
Also another important point to note is that, there is a reason these metrics are arranged in this order.
You should work on fixing each metric in the order they are arranged.
IMPORTANT - I am asking you to fix each metric, not scale it. For example, you just need some minimum traffic to figure out how well your app idea is going to do with people in your target audience. DO NOT spend all your money at this stage trying to acquire a hundred thousand downloads. If the rest of your funnel is not optimized, your users will just leak through your funnel and you will be left with an app which has no active users.
Another well written post is Using Pirate Metrics to Analyze Your Mobile Application’s Audience