What is AARRR?
AARRR — Acquisition, Activation, Retention, Referral, and Revenue — is a funnel model popularized by Dave McClure. It gives growth teams a shared language for diagnosing where users drop off and where to experiment next.
Acquisition
How do people discover you? Track channel-level CAC, conversion rates, and quality of signups — not just volume. Prioritize channels that bring users who activate and retain, not only those with the lowest cost per click.
Activation
Activation is the moment a new user experiences core value for the first time. Define your "aha moment" (e.g., first project created, first report generated) and optimize onboarding to reach it faster.
Retention
Retention is the strongest signal of product-market fit. Measure D1/D7/D30 retention or cohort curves by segment. Lifecycle emails, in-product prompts, and habit-forming features all live here.
Referral
Referral turns happy customers into a growth channel. Viral loops, referral incentives, and shareable outputs (reports, templates, certifications) can lower blended CAC when done authentically.
Revenue
Revenue metrics include conversion to paid, ARPU, expansion, and churn. Growth and revenue teams should align on which monetization experiments support long-term LTV, not short-term spikes.
Using AARRR in practice
- 1
Pick one stage with the largest measurable leak.
- 2
Write a hypothesis: "If we [change], then [metric] will improve by [amount]."
- 3
Run a time-boxed experiment and document results.
- 4
Stack wins and revisit the funnel monthly.