A brief analysis of the operational strategies at each stage of the AARRR model

The AARRR model can be simply understood as how users come, how to make users active after they come, how to retain users after they become active, how to make users pay for products after they are retained , and how to spread word of mouth after users pay. This article will do some simple work and learning summary on the AARRR model.

A AR RR model definition

AARRR is the abbreviation of Acquisition, Activation, Retention, Revenue, and Refer, which correspond to the five important links in the user life cycle: acquiring users, increasing user activity, increasing user retention rate , obtaining revenue, and self-propagation .

The AARRR model can be simply understood as how users come, how to make users active after they come, how to retain users after they become active, how to make users pay for products after they are retained, and how to spread word of mouth after users pay. The AARRR model is also a typical funnel model .

Overview of the AARRR Model

Get User

Acquiring users means that we need to understand where our target user groups are and convert them into users of our products to the greatest extent possible. The main purpose of this stage is to convert potential target users into users of our products and start using the products . The key to improving user registration conversion rate is to optimize the product landing page to accurately convey the core value of the product. Secondly, we need to strengthen the product’s new user guidance, such as using storytelling, voice, video and other forms of vivid presentation, so that users will find it fresh and fun and will use our products.

In the user acquisition stage, we need to expand the channels for acquiring target users as much as possible. Common promotion strategies include:

• Import users using third-party open interfaces of open platforms and social networking sites.
• Use seed users (experts or opinion leaders) to bring in users.
• Mainstream media publish soft articles about products to increase product exposure.
• Use product placement to increase exposure for product brands , mascots, products, etc.
• Cooperate strategically with other companies to learn from each other’s strengths and make up for each other’s weaknesses.
• Search engine optimization , Baidu keyword bidding promotion .
• Encourage users to scramble for scarce resources, such as limited-time purchases.
• Create accounts in mainstream forums, plan events, repost a large number of posts or get media involved.
• Carry out creative promotion of products.
• QQ group or WeChat group promotion, Baidu Encyclopedia promotion, picture and video promotion , etc.

Increase user activity

The definition of activity depends on the product. For some products, users are considered active as long as they log in or launch the product once within a specified time. For mobile application products, there are two other key data indicators for user activity : the average usage time per launch and the average number of launches per user per day.

Sometimes, in addition to logging in and starting up, a product must also require users to perform specified operations to be considered active. When iterating our products, we should also continue to improve our products based on changes in user activity data of different versions.

In the stage of improving user activity, commonly used operational strategies are:

• Learn from the user growth systems of gaming products, such as the task system and level system, and build a user growth system for your own products.
• By taking advantage of the entry of seed users, you can attract their fans to join.
• Plan operational activities. Including online and offline activities , for example, some activities can be planned for major festivals every year to stimulate user activity.
• We adopt a VIP user membership system, with differentiated treatment, and VIP users enjoy privileges. Satisfy the vanity of VIP users and encourage ordinary users to become VIP users.

Improve user retention

User retention rate is a very important data indicator, which measures whether a product grows healthily.

Retention rate = number of logged-in users/number of new users*100%, where the number of new users refers to the number of users who newly register and log in to the application during the current time period, and the number of logged-in users refers to the number of users who have logged in at least once during the current time period. The retention rate reflects a conversion rate, which is the process of converting initially unstable users into active and loyal users.

There are generally three important indicators for retention rate: Next-day retention rate = number of new users who logged into the app on the day and on the second day / number of new users who logged in on the day. The 7th day retention rate = the number of new users who logged into the app on the 7th day / the number of new users who logged in on the day. The 30th day retention rate = the number of new users who logged into the app on the 30th day / the number of new users who logged in on the day.

Commonly used operational strategies for improving user retention rates are (methods for improving user activity are also effective):

• Define lost users and lost intervals. The definition of lost intervals for products with different user characteristics is different. For some products, users are considered lost if they do not return to use the product for one day, while for other products, users are considered lost only if they do not use the product for one month.
• Adopt a user recall mechanism to identify the core demands of users. You can recall users through text messages, emails, etc. The way to recall users should be unique. Just a few unattractive words will not impress users.
• Increase the screaming experience of the product. The product’s retention rate will only be improved if it meets user expectations in terms of functions, content or operating mechanisms.

Get income

To obtain revenue, users must pay and consume, and retain users must be converted into paying users . An important data indicator at this stage is LTV, which is the revenue value contributed by users to the product, and is the sum of all economic benefits the company obtains from all user interactions .

In the stage of increasing income, the main strategies are:

• Reasonable pricing strategy, based on the nature of the product, adopts psychological pricing, discount pricing, differential pricing and other strategies to set the price of the product.
• Consumption pattern formulation. For example, try before you spend, free for VIP users, points system , etc.

Self-propagation

Self-propagation refers to users’ spontaneous word-of-mouth promotion of a product. The data indicator for self-propagation is the K factor (recommendation coefficient), K = the number of invitations each user sends to friends/the conversion rate of those who receive the invitations into new users. If K>1, the user base will continue to grow; if K<1, the user base will gradually stop growing.

In the self-propagation stage, we need to improve the K factor. Common strategies include:

• Development of a sharing invitation mechanism. Improve the product's sharing invitation mechanism. Through sharing invitations, you can get more potential users. It should be noted that we need to reward users for their responses.
• Word-of-mouth communication, creative promotion of products, event hype, etc. Create relevant topics for the product to attract users' attention.
• Increase the screaming experience of the product. With screaming points that exceed users' expectations, users will naturally spread the word of our products.

AARRR data indicator summary and application

Data Indicator Summary

The key data indicators of the AARRR model are summarized as follows:

• User acquisition stage: downloads, installations, and activations .
• Stage of improving user activity: number of logins, number of startups, average usage time for each startup, average number of startups per user per day, number of daily active users, number of weekly active users, and number of monthly active users.
• Stages for improving user retention rate: next-day retention rate, 7th-day retention rate, and 30th-day retention rate.
• Revenue generation stage: LTV, conversion rate, and average spending per user.
• Self-propagation stage: K factor (recommendation coefficient).

With so many data indicators, what is their priority? We know that the AARRR model is a typical funnel model, and the users filtered to the end are definitely the most important and highest-quality users, that is, the users in the self-propagation stage. From this we can know that the order of importance of data indicators is: K factor>LTV>retention rate>activity>activation volume>download and installation volume.

Application of data indicators

We can analyze the promotion channels that the product should adopt based on these data indicators of the AARRR model.
First, users from each channel are randomly sampled and the sampled users are uniquely identified. In this way, all behaviors of the identified user when using the product will be tracked. Then, we collect and analyze the required data to draw conclusions: which channels have the highest quality in terms of K factor, which channels have the highest quality in terms of LTV, and so on.
The channel selection is in the order of K factor > LTV > retention rate > activity > activation volume > download and installation volume. If our product has not yet reached the self-propagation stage, then we can start with LTV, and so on. In this way, we can analyze the best promotion channel our products should adopt.

Summarize

As product managers , we should have a deep understanding of the user life cycle AARRR model and understand the input-output ratio. The essence of product operation is to obtain the maximum benefit at the lowest cost .

The author of this article @流年 is compiled and published by (Qinggua Media). Please indicate the author information and source when reprinting!

Product promotion services: APP promotion services Advertising platform Longyou Century