November 1, 2019
You can read this article in about 11 minutes
This article explains RARRA and how to drive business growth with a focus on retention.
The AARRR Funnel, so-called "Pirate Metrics", has been the go-to framework for business growth since Dave McClure created it in 2007. However, 10 years after its creation, a new framework for growth has appeared, RARRA. Both AARRR and RARRA cover the same activities, but there is an important distinction. Whereas AARRR is focused on a chronological short-term user acquisition funnel, RARRA focuses on the activities that increase medium-to-long-term ROI.
By reordering the steps, you allow your growth / marketing / business development team to focus their time, effort, and money. It’s the difference between spending $10,000 on Google Search advertisement this month (acquisition focused) and spending $10,000 on UX/UI improvement (retention focused).
In 2007 Dave McClure created theAARRR Growth Metrics Framework. It aims to optimize product marketing and product management, especially for startups.
Growth hackers and marketers everywhere used the AARRR method to effectively tracks their product marketing efforts. It was great for startups who wanted to grow their businesses in the early stages. AARRR focuses on the customer's journey and conversion funnel but misses the point of a growth model. Now in 2019, this method has become outdated.
"To get the most out of the model, you need to re-prioritize the funnel."Gabor Papp
In 2017, Thomas Petit and Gabor Papp reorganized the steps of AARRR to RARRA to shift focus towards areas with the highest medium-to-long-term benefits for ROI. Whereas AARRR is chronological (hence the term ‘funnel’), RARRA is ROI-based.
This reorganization is important because optimizing retention:
Therefore, optimizing retention is your most important goal in 2019. If you can't retain your customers, you are filling a leaking bucket. You're burning cash for less return on investment.
These growth drivers and metrics will vary depending on your product/service, but they should give you some ideas to get started :)
|Retention||UI / UX improvements |
Contents creation and sharing
Landing pages for product features
Social media to educate your customers
Videos that show users your product features
Defining the ideal user journey and encourage users to follow it
|Customer Churn |
Revenue Churn Rate
Existing Customer Revenue Growth Rate
Repeat Purchase Ratio
Product Return Rate
Days Sales Outstanding
Days Sales Outstanding
Net Promoter Score (NPS)
Time Between Purchases
Loyal Customer Rate
|Activation|| Customer on-boarding |
One-step registration with email
Screens per Session
|Referral|| Rating prompts |
Social/Contact List Integration
| Referrals |
Ratings & Reviews
|Revenue|| Sales & Promotions |
| Monthly Recurring Revenue |
Return on Advertising Spending (ROAS)
Customer Acquisition Cost (CAC)
Return on Investment (ROI)
Average Revenue per user
Customer Lifetime Value
|Acquisition|| Ratings & Reviews |
| Downloads |
Product page visits
|AARRR (focusing on activation first)||RARRA (focusing on retention first, activation last)|
|If you invest $1000 to acquire 100 new users, and 95% leave by the end of the month, then you have spent $1000 for 5 users. Your Customer Acquisition Cost (CAC) is $200.||If you invest $1000 to acquire 100 new users, and 70% leave by the end of the month, then you have spent $1000 for 30 users. Your Customer Acquisition Cost (CAC) is $33.|
Optimizing retention is an iterative process, and the more you test the better you will become. Remember, all tests should focus on retention and activation so you can show progress and optimize based on data.
We tried to keep this article short and sweet to show the difference between AARRR and RARRA frameworks and help get you to start optimizing your retention rates. Of course, Activation, Referral, Revenue, and ultimately Acquisition Growth Drivers / Metrics are also important for sustainable SaaS product marketing. However, we’d encourage you to focus on retention first. In this way, you can get the added benefits of trickling down your efforts to the other areas of the RARRA model.