Back in December 2009 when Patrick Vlaskovits and I first contemplated our Customer Development book, I was noodling around with a graphic to illustrate the integrate Dave McClure’s Pirate Metrics with Customer Development activities. I posted the graphic in a blog post which garnered lots of attention, including an important comment from Dave himself:

btw, note that AARRR isn’t exactly sequential… in fact, i’d emphasize Activation & Retention *first*, then go after Acquisition & Referral, then optimize for Revenue

Recently, I have caught a couple of my Customer Development clients optimizing the metrics in the “wrong” order, so Dave’s comment bears repeating and perhaps some expounding upon.

The Pirate Says “AARRR”

The anagram is ordered by user experience:
A – Acquisition – User is directed to your site;
A – Activation – User signs up or is otherwise engaged;
R – Retention – User keeps coming back, i.e., is engaged over time;
R – Referral – User invites others;
R – Revenue – User pays or is otherwise monetized;
This is not, however, the order in which you should optimize your product while building your business.  The order (and truly, the metrics themselves) are dependent upon your business model.

For B2C Free, Say RRAAR

Retention – Nail engagement so that users want to or must come back;
Referral – Your business model requires massive user growth, so your product must require referrals to work or must be so cool it just happens;
Activation – Once your users are here to stay and inviting others, optimize their conversion funnel.
Acquisition – Now you’re ready to blow up acquisition.  (Good time to get investment funding.)
Revenue – Millions of users?  Time to monetize.

For B2C or B2B Freemium, Cheer RRRAA!

Retention – Nail engagement so that users want to or must come back;
Revenue – If your business model requires users or businesses to pay, you need to figure out what they’ll pay for before you blow-up anything;
Referral – Since you’re likely not a true network-effects business, you optimize referral after revenue.  Optimizing referral is actually part retention, part funnel optimization.  Users are so happy they will refer others to your site or provide you testimonials or speak to the press, etc.  Not much sense in blowing up your acquisition, however, until you have that level of passion.
Activation – This refers to Blank’s “Sales and Marketing roadmap.”  Here you understand and optimize your sales funnel.
Acquisition – OK, now you can hire that PR firm.

For Enterprise B2B, Cheer an alternative RRRAA!

R – Revenue – If you’re selling to businesses the number one thing you need to prove is that someone cares enough about what you’re providing to give you money for it.
R – Referral – As above, referral in this context means that your customers are willing to sing your praises publicly.
A – Activation – In this context, activation is understanding your sales and marketing roadmap.
A – Acquisition – After you nail your sales and marketing roadmap, you’re ready to feed the top of the funnel.
R – Retention – In enterprise B2B, you often don’t have a subscription model, but may be charging annually for maintenance and support.
Note that you will always need to do some level of “acquisition” in order to figure out and optimize the other stuff.  But the point is that you’re not concentrating on or optimizing acquisition at the start.  Exact order of AARRR is debatable from one business to another, so use above as guidelines only.