SaaS leaders: Are you optimizing your AARRR flow?
The AARRR funnel, adapted here for B2B SaaS with freemium or limited time trials, measures important stages of your revenue funnel. Acquisition, Activation, Retention, Referral, and Revenue (AARRR) are critical for any B2B SaaS business to quantify and track. But what do these terms really mean?
Here's what you need to know about the AARRR funnel for SaaS growth:
This is the process of acquiring new accounts as trial users. In order to be successful, you need to have a clear acquisition strategy in place.
Once a first user in an account is acquired, it's important to activate them. This means getting them to use your product in a way that is produces value for them, and providing nurturing (such as an email drip) to ensure they get the most from your product.
Retention (and Expansion)
The next step is to retain these customers and expand the value of their accounts. This means keeping them engaged with your product so they don't churn, and developing campaigns to expand users in the account.
Happy users make referrals.This is when customers tell others about your product, which leads to new customers. You can improve this with two things: first, great product experience, and second, a referral or advocacy program to increase the flow of referrals from your users.
This is what it all leads up to. You need to generate revenue from your users. This can be done through upgrades (from freemium to premium), feature-based upsells, service and product cross-sells, and account expansion.
Get On Track for B2B SaaS Growth with AARRR
The original AARRR framework was developed by Silicon Valley investor and founder of 500 Startups Dave McClure to help companies change focus from vanity metrics to metrics that matter.
If you want to improve your top line revenue and bottom line profit, then you need to focus on all aspects of the AARRR funnel. Once you start tracking, you can start reacting to the data and making scientific improvements.
Do you have any questions about the AARRR funnel? Let me know. Whether you need a bit of advice or a true growth partner, my team and I are ready to contribute to your SaaS success.