The A3R3 Funnel aka AAARRR Funnel was first documented on my personal blog in 2017.
Over the past year, I’ve worked with 60+ startups on growth hacking and growth marketing consultation. The A3R3 funnel fits right into startup requirements as it involves a full funnel marketing approach.
If you want to execute marketing campaigns for goals beyond just Acquisition, you need to work throughout the funnel.
What is the A3R3 Funnel?
The AAARRR framework or the A3R3 funnel describes the stages of the user journey with a startup or business in 6 stages namely Awareness, Acquisition, Activation, Retention, Revenue and Referral.
Here are the stages of the A3R3 Funnel or AAARRR Funnel:
Let’s use an example to understand all the stages of the funnel.
We will also add one growth hacking idea for each stage.
A3R3 Funnel with Example Campaigns
The A3R3 funnel with Growth Experiment Ideas:
- Influencer partnerships with macro influencers to boost awareness – AWARENESS MARKETING
- Influencers create content offering a free trial class – ACQUISITION MARKETING
- Easy onboarding user experiment and free training – ACTIVATION MARKETING
- 10% discount coupon for their first purchase of any online learning package – REVENUE MARKETING
- 20% offer for renewal of churn-risk customers – RETENTION MARKETING
- Ask the most engaged customers to share your offering – REFERRAL MARKETING
While these are simple examples, they illustrate how full funnel marketing works.
Since your user goes through these 6 stages, your growth campaigns should also cover all the stages.
Stages of the AAARRR Funnel
The Awareness Stage focus on growth activities and experiments that make the potential audience aware that a solution exists for a need they have which they may or may not know about and that a solution is available with our startup.
Acquisition is when the user can be identified specifically as a user – and not just as a number on the “traffic” metrics of your analytics dashboard.
Activation is the next big step in your growth funnel. In this stage, you’re actually having the first interaction with your product or service. This is where the user has gone from being a user on your website or just a lead to actually interacting with your product and thus upgrading to being a prospect.
Ask the question: How many users start paying for your product or service? It’s important to think in revenue in terms of both the number of users who pay for your product as well as the actual revenue (in amount) that you can bring in. This is what the revenue stage of the A3R3 funnel is all about.
Retention becomes the natural next stage of focus after the first purchase or initial transaction. After users have signed up for a service or purchased a product, they’ll be looking for the transformation your product or service had offered.
NOTE: In the order of the user journey, the Revenue and Retention stages can often be reversed depending on how your business or startup is structured.
This is often the most overlooked stage of the AAARRR funnel. This is where your existing customers refer your product or service to their friends and family. There are 4 different stages of Word Of Mouth that marketers and growth hackers can tap into when it comes to referral campaigns.
Define your startup funnel
As a next step, you can define your startup funnel based on the stages explained above.
Step 1: Define your AAARRR Funnel
What does each stage of the funnel look like for you? Does Revenue come before Retention or the other way round? Write down each stage.
Step 2: List all the activities you need to do to improve each stage
How can you improve Awareness? How can you increase retention? Answer the question for each stage of the funnel.
Step 3: Assign metrics for each stage of the funnel
What are the best metrics to measure Activation for your startup? How do you measure effectiveness of referral campaigns? List at least one metric for each stage of the funnel.
While answering the above questions, you will find that your startup might be doing better in some stages of the funnel compared to others.
For the next 30-60 days, switch your focus to improving where you’re lacking or where the bottleneck is. For examples, if you’ve focused more on acquisition, you could be losing money by having lower retention rates.
In that case, you need to improve retention before going back to boosting your acquisition campaigns.
When you improve your funnel one step at a time, you’ll see your overall funnel conversion rates improve. This will eventually lead to improvements in your OMTMs and your North Star.