This article is the first kara Cloud product technology blog: “AARRR Disrupter RARRA, who is the best Growth hacking model?”
The philosophy of AARRR and RARRA is fundamentally different. The former focuses on “acquisition”, while the latter focuses on “retention”. What kind of growth model to choose is to choose different growth values. Growth values lead us to make specific choices at the execution level, with product life and death behind each choice. I hope this article brings a new dimension to your thinking about “how to grow”. enjoy it.
In 2007 (just after the release of the iPhone generation) Dave McClure designed a set of business growth models. This is the classic growth theory that has guided our business growth for over a decade and has become the industry standard for product managers to talk about business growth.
In his “Pirate Growth Metrics” talk, McClure proposed AARRR, a system of metrics for tracking product growth that has helped countless entrepreneurs grow quickly in their early stages.
But today, more than 10 years later, the Demographic dividend of the Internet has disappeared, cheap traffic is no longer easy to find, and we have moved into the post-traffic era, focusing on “customer acquisition” to “retention”. Next, we’ll take a look at why the RARRA Growth model proposed by Mobile Growth Stack is the best Growth model for the post-traffic era.
Before we talk about RARRA, what is AARRR growth model
What is AARRR and why is AARRR growth model so classic?
Dave McClure’s Pirate start Indicator
The AARRR user acquisition model is divided into five levels
1. Acquisition
2. Activation
3. Retention
(4) Referral
5. Revenue is business realization
AARRR growth metrics model user capture graph, like a funnel, from top to bottom.
1. Acquisition: First we need to acquire new users from various Acquisition channels.
2. Activation: Guide users to use the core functions of your product through the guidance of novice users, so that target users can quickly learn to use the product, quickly transfer the value of the product to users, and activate users to use the product.
3. Retention: Activated users have a clear understanding of the value of your product to them, and then move into the Retention phase, where we try to provide value to users and try to keep them.
Referral: Identify the characteristics of the product (self-presentation, social currency, media for information transfer, etc.) that the user is willing to share, and promote the product influence.
5. Revenue is Business Realization: Ultimately, Revenue is the ultimate goal of everything. Whether it’s directing users to consume ads, matching deals, or simply selling membership services, we need to facilitate user conversion (business monetization) in the right context.
AARRR User acquisition funnel (figure above) describes in detail the entire process from the first time a user enters your product to the last time the user realizes the conversion.
The AARRR growth indicator model is simple and clear, which is why it is so popular that it has become the standard analysis model for growth departments in many companies.
More importantly he around each marketers are concerned about the core index and establish – “new”, we all like quickly pull a new guest, is almost a synonym for “new” and marketing, most people tend to do growth also to return for the Marketing Department, so new is most growing entrepreneurial company the most critical data index.
Why AARRRR model no longer works in the era of mobile Internet
Why is AARRR no longer relevant in the age of the mobile Internet?
Let’s start with a set of data for “new users after installing the App” :
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Lost 77% of DAU in the first 3 days
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Lose 90% of your DAUs in 30 days
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DAU lost in 90 days rose to over 95%
Credit: Quettra
Take a look at this graph, the numbers don’t lie, and the horrendous churn that hits every startup trying to grow.
To put it another way: If we look at average retention, for every 100 new users we acquire, only five are still using our App three months later.
But 10 years ago, there was no such problem.
In 2008, the year after the iPhone generation was released, there were only 500 apps in the entire App Store, and as long as you didn’t launch a copycat App, there was almost no competition and traffic was all yours. The popularity of the iPhone brought hungry users who wanted to try new apps to the App Store at almost no acquisition cost.
Today, the market is completely different.
There are now more than 2 million apps on the App Store and nearly 3 million on Google Play.
Statista
Competition is already fierce, and the cost of acquiring customers is no longer as cheap as it was then. It’s almost impossible to make money from natural traffic when you simply launch an App.
In this situation, a purely growth model aimed at attracting new growth makes little sense. As Brian Balfour has put it, data indicators aimed at attracting new growth go into the “wheel of meaningless growth.”
Photo by Brian Balfour
If you get a million new sign-up users this year, it sounds exciting. At your company’s annual meeting at the end of the year, you might even say that your target for next year is 5 million new sign-up users.
But if we think about the 90 day retention rate of new users is only 5%, then we add 5 million new users, which is only 250,000 that eventually settle down to become our real users.
MRR (Monthly Recurring Revenue) refers to “Monthly Recurring Revenue”
Attracting new customers is at the core of growth.
As Jonathan Kim puts it, “AARRR is an outdated model for SaaS. Much of the logic is still valid, but a better growth model is long overdue.”
We need a better growth model — and that model is RARRA
What is the RARRA Growth model?
Mobile Growth Stack
AARRR and RARRA models are not just simple order transposition, but also the subversion of core values that guide the direction of products we think about.
RARRA is an optimization of the pirate index AARRR model by Thomas Petit and Gabor Papp. The core of the RARRA model has changed from acquisition to retention.
1. Retention: Provide incredible value to your users and keep them coming back to use your product over and over.
2. Activation: Confirm that newly registered users see the core value of your products in the first time.
Referral: Get them to share and recommend your product.
4. Conversion (Revenue) : Users pay for conversion of the value your product provides.
5. Acquisition: Think about the spread of your product, getting existing users to bring new users, or buying traffic directly from advertising (buying users).
Mobile Growth Stack
The core growth metric RARRA focuses on: retention. Can you get your users to come back to your App?
If your answer is “yes,” your user base will grow and your user base will be built.
If your answer is “no”, you are actually renting traffic. No matter how many users download and activate your App, as long as you can’t get them to come back on their own initiative, our way of acquiring customers is renting traffic. Once you stop renting, DUA plummets, users lose rapidly, and ultimately it is meaningless.
As Brian Balfour said, we should focus first on core metrics that reflect real growth, and retention is one of those core metrics. Retention means you’re creating something truly valuable, because your users will keep coming back.
When we make retention a priority, we give high priority to the true value of the product to the user, and only products that are valuable to the user can achieve high retention.
Next, let’s look at the RARRA model in action.
Why is RARRA a better growth model? — Hitlist case studies
In 2013, Gillian Morris and her two co-founders launched Hitlist, an App that helps users save money while traveling
“, The App has attracted a lot of media attention since its launch, including coverage on The Next Web, Lifehacker, The New York Times, and even a Greek travel blog.
Feedback from users has also been very positive, with many going out of their way to help spread the word and express their love.
Gillian Morris
Thousands of new users flooded into the Hitlist App, but there was only one problem, the retention rate was extremely low and the new users hardly came back.
Gillian Morris
Three months after the App’s launch, less than 5% of users were still active.
At this stage, a couple of Hitlist investors started suggesting AARRR growth, suggesting That Gillian Morris run FaceBook ads in the hope of getting customers quickly.
Fortunately, other sensible Hitlist investors are rooting for Gillian Morris to abandon AARRR and move to RARRA.
As mentioned above, “If your retention is a problem and you’re spending a lot of money on acquisition, you’re just renting traffic, not really getting new acquisition.”
As a result, the Hitlist team started using retention as their key metric.
They redesigned the UX to include elements that facilitate user conversion (facilitating purchases).
After the release of the new version, Hitlist 2.0 is almost a failure if AARRR’s metrics are any guide.
- Mentions on wechat moments, weibo and other social media have dropped significantly
- Media coverage is down
- The number of cities “liked” per user fell from 41 to 5.6
Based on the AARRR acquisition model, version 2.0 failed anyway.
But the team’s core goal was no longer “acquiring customers.” When they looked at the numbers, they found that 42% of new users were still using them, monthly active users (MAUs) increased from less than 1% to 10%, and many of those users returned multiple times.
Gillian Morris
A year later, Hitlist has 250,000 users in 163 countries and booked over $6 million in travel transactions.
When we set our core growth metric to “acquisition,” we lost focus on retention, which resulted in higher attrition rates, higher acquisition costs, and a plateau in active user growth over time.
When we set the core growth metric to “retention,” active users will continue to accumulate over time, driving the product’s own growth.
Ok, now let’s talk about strategy. How do we use the RARRA model to create an App growth strategy?
How to use RARRA to create growth strategies
1. Start with retention
As mentioned above, retention is the cornerstone of App growth.
The first step is to evaluate your product’s current retention and churn points.
N days retention graph
Calculate your product’s N day retention rate and see how many users come back. Then do your own research on what causes churn, and focus your attention on that.
Once we get a user, how do we get them to come back? Find ways to prove the value of your product and build user habits. First of all, we need to look at how the heavy users of our product are using it. What are the heavy users doing in your product? What features are used? What time of day are they most active? What did they do in the first 48 hours after installation?
Use the “group analysis method” (I will write a single article if possible, please follow the ** @Kla Cloud ** account for subsequent updates) to find the path of “ideal users” of your product, and encourage new users to follow the path of “ideal users” through product design. For example, we often see that users are required to complete new tasks after registration. After completing new tasks, users will be given a small reward in the App to encourage new users to complete the “ideal user” path and greatly promote retention.
The key to getting users to come back is to understand why they like your product, optimize those key features that keep them coming back, improve the user experience for those features, push personalized notifications, and bring them back. The most important thing is to listen to users’ opinions, which can help you quickly locate core features and correct errors, and iterate on your product.
2. Accelerate user activation
Once a new user signs up, we only have one chance to catch him, so the first login experience is very important.
We don’t make products for people to download, we make products for people to use.
So we need to figure out, what are the main things that users do on our product? Is it shopping? Share photos? Add friends? Like or comment on content?
Once you’ve defined your user activation milestones, you can focus on creating a login guide that will attract new users, get them to follow the path you’ve designed, and ultimately reach the activation milestones and promote retention.
You may think that your product’s UI design is so friendly that you don’t need a login guide. In fact, unless your interface is very simple, users will still be confused at first sight and need a login guide to help them complete their understanding of your product.
Efficient and friendly novice login guidance will help users quickly figure out how to use your product, use UI mask and simple visual prompts, so that users can experience the value that your product can provide for him as soon as possible, quickly establish the use habit, and improve the possibility of users to stay.
3. Establish an effective recommendation system
According to a study conducted by Nielsen, a whopping 92% of people trust recommendations from friends.
Encourage regular users to forward, share and recommend your products through various sharing and recommendation methods. This recommendation is the fastest and most stable way for us to expand our user base.
In addition, we can also engage users in sharing and recommendation through a series of reward mechanisms such as coupons and cash back. This new way of attracting customers is very effective.
Let’s take a look at Airbnb and Uber’s coupon sharing pages
By providing vouchers and rewards to old users and new users brought by old users, users are encouraged to share and spread virally. This form of sharing recommendation is a powerful new engine of Weikera.
4. Improve users’ LTV/Life Time Value
The longer a user stays with us, the more value they contribute to our business. The more time you have, the more stable your forecast of their income contribution will be. In other words, the revenue generated by retained users can then be invested in acquiring customers, and your product begins to snowball into a growth cycle.
Here are some ways to improve a user’s LTV:
(1) Send reminders of periodic achievements and progress (wechat, email, push, etc.)
Send weekly/monthly notifications to users (commonly used emails abroad, wechat service number push in China, etc.) and summarize the benefits users have gained from your App within this period, such as how much money they have saved, how much music/videos they have listened to or watched, how much time they have saved, etc.
Notification of periodic achievement information for users (email, wechat, push message)
(2) Don’t miss upsell and cross-sell opportunities
UpSell: Recommend related products and higher-value products to users based on their usage data in products.
Cross-sell: analyze relevant needs matching users’ purchasing behaviors, promote highly relevant products, services and other products to users and create more sales opportunities.
Amazon’s App, for example, recommends deal-leading products based on a user’s purchase history, ratings and browsing behavior.
(3) User feedback
Understanding the real needs of our users helped us prioritize our product development roadmap and identify the needs that really drive retention and business growth, which is critical to improving the user experience and enabling users to share.
Reach out to the loyal users of your product, learn who they are, and connect with them. This is important for reducing attrition, improving app store ratings, and word of mouth.
Optimize the channels for acquiring customers
When your product user growth and investment volume is still small, as long as you carefully observe, you will find that the characteristics of users imported from different channels are different, and some of the users imported from different channels are just to collect wool, which is very poor. Some channels import very accurate users, high activity, long retention. Be sure to find the right customer channel for your product. Cheap and cheap users are not as good as accurate and high retention users. It is meaningless to pursue user growth. Focus on the core goal (retention) and focus on user quality is key.
Let’s take a look at a data case of multi-channel customer retention transformation
We can see the percentage of channel acquisition, but which channel retains the most customers?
From the perspective of the conversion funnel, Facebook accounts for 42% of the converted users, while Instagram accounts for 25% of the converted users even though it only accounts for 10%, indicating that the conversion rate of users is very high. Google Ads brought in 25 percent of users, but only 6 percent of paid conversions.
The obvious thing to do is to spend more on Instagram and less on Google Ads.
conclusion
As long as we give our products a little traffic, found that our products can retain users, then we can increase marketing, advertising, add users at the top of the marketing funnel. This is the core of RARRA’s growth model, and focusing on retention is the key to the whole thing.
Jiang Chuan, co-founder and b-end product manager of Kara Cloud, focuses on the implementation and construction of internal efficiency tools in enterprises. Personal wechat: HiJiangChuan, welcome to communicate with us.
Cara cloud is a product – and technology-oriented enterprise tool development platform, as long as you can write SQL, you can quickly start.
If this article has been helpful to you and you want to learn more, please visit our website Carla Cloud.
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