500Startups founder Dave McClure was quoted saying, “A ‘startup’ is a company that is confused about 1. What its product is. 2. Who its customers are. 3. How to make money.“
What if I told you that Behavioral Thinking provides the answers to all of these questions?
Dave McClure developed the AARRR model (also known as the Pirate Metrics Framework...because say it out loud) to help companies focus on the right metrics to promote and measure their growth.
As an entrepreneur and investor in Silicon Valley, he has invested in hundreds of startups globally, including 10 IPOs and over 30 unicorns. It’s safe to say he knows a thing or two about what success looks like.
So, that brings us back to our first question, namely: What does the AARRR model have to do with Behavioral Thinking?
Pretty much everything, and you’ll soon see why.
As more than pirate’s speak, AARRR tells growth, marketing, and product managers what to track.
It stands for:
Acquisition: Essentially, acquisition is the answer to the big question of, “Where are our users coming from?” It’s not just about where your users find you. It drills down into the entire funnel from once a potential user interacts with your product or website for the first time to when they convert to becoming a user. Each micro conversion along the way plays a part in transforming a curious person into an avid user of your product.
Activation: Acquisition and activation go together like food and a food critic. Activation is all about your user’s first experience with your product. Just like you want a food critic to say, “Ahh and mmm” at their first bite, you want a user to exclaim “Aha!” as they interact with your product and realize its potential, which is what will keep them coming back for seconds (and thirds and so on).
Retention: Retention shows you if you achieved market fit or not, and it is one of the most important metrics for your business’ success. It’s the difference between a user coming back for continued use or losing them to a competitor (customer churn). Without users, you just have technology.
Referral: A surefire way to achieve product growth is to create something so good that your users become your advocates (and basically, one of your most impactful marketing channels). Word-of-mouth marketing means that your users are telling people about your product, thereby bringing down your user acquisition costs (and maximizing your revenues). This can be prompted through the use of incentives (more on that later).
Revenue: Let’s talk money. The final step answers, “How can you increase revenue?” With the four above elements in place, revenue should be flowing smoothly. Increasing your customer lifetime value (CLV), or the total amount of revenue generated from a customer during their lifetime as your customer, while decreasing customer acquisition costs (CAC) will boost your bottom line.
AARRR metrics tell you what to measure.
But, to truly understand how to push these figures in the right direction, you’ll need to know why your users take action in the first place (or fail to take action).
By uncovering the conscious and unconscious behaviors, this is made possible. Now, you’re probably asking how to do that.
Well, here at Q, it's what we do. We have a team of experts across various fields that comes together to apply interdisciplinary models and frameworks to answer Why. This way, we can devise solutions that explain how to make your team/company goals come to fruition.
You can consider us to be the captains and crew members of your business growth ship.
Let’s look at what Q can do at every stage of the AARRR model:
To acquire users, you need a clear value proposition that is attractive to your audience. To know what they want and need, Q helps you deeply understand your target audience and create personas. Then, we can help you develop your go-to-market strategy, based on the context surrounding your target audience.
As an entrant in the market, a cashback app in Israel needed help in acquiring users. With a focus on psychology and gamification, Q’s team provided insights for optimal UX/UI design by defining a social communal loop and gamification advancement loop.
Through choice architecture methods and behavioral design, our team helps your team to identify cognitive/emotion barriers and motivations that boost user engagement and maximize conversion rates.
An online platform was suffering from low conversion rates, and we delivered solutions that resulted in a 30% increase in sign-ups YoY. Read the case study to learn how.
Retaining your users means preventing churn, which can be done when you know why your users leave in the first place. We’ll help you gain clarity of their perceived value and frustration, as well as map the user journey in detail to enhance the user experience and focus on their peak moments.
This education platform couldn’t understand why educators were dropping off within the first 2-4 weeks of signing up. This one-feature solution made a big difference.
By uncovering users’ perceived values, we can help your company increase user satisfaction and nudge users to refer your product or service to others by A/B testing behavioral hypotheses and analyzing data.
A startup had the goal to deliver transparency for the market price of raw materials, but users weren’t willing to share information. The big question was, “Why not?” Here’s how Q helped the platform reach a 400% conversion rate increase.
Want to know where to allocate your budget to maximize ROI or adjust your pricing model to acquire and retain users? We’ll get to know your users’ needs/pains and conduct price sensitivity analysis, while mapping the competition to refine campaigns that boost your bottom line.
Want to know how this solar energy company in Africa achieved a 13% increase in Average Revenue Per User (ARPU)? Our research uncovered cultural context to reshape their organizational structure.
In the wonderful world of operating a business, the challenges you’re bound to face are as plentiful as the fish in the sea. To overcome challenges or answer the big questions, it’s useful to have experts by your side that can approach each of them from a different perspective. That’s why Q is here to help.
By doing so, your business benefits as we reduce blindspots while solving problems, provide a clear division of labor, and purposefully control collaboration efforts for when they are needed to develop solutions that deliver results.