The main objective of a commercial application, at least from the business standpoint, is usually to build a userbase, monetize it (or persuade it to do something else), and raise loyalty. This kind of approach allows you to shape your budget in a somewhat predictable way, as paying customers stay with you longer. To better describe this process, we can simplify and measure it with the “AARRR metric”, a tool often used by Product Managers as one of the KPIs for a new product.
The five elements of AARRR are:
Each of these elements can be measured by employing simple values that are easy to quantify.
Acquisition describes how many users (or customers) get interested in your product and try it out, and how they discovered your app.
Activation is all about how many users act in a way that increases the chances of their return, and what kind of first experience your app gives them.
Retention addresses how many users come back to you within a relevant time period, i.e. how many users you retain and why that many.
Referral describes how many users recommend your app and how you can turn your userbase into brand advocates.
Finally, Revenue helps you track how many paying customers you have, what their average lifetime value is, and how you can increase your revenue.
The main reason why PMs use AARRR is that this set of metrics can give them a quick overview of the state of their userbase, including key interactions between users and the product. Using AARRR makes benchmarking changes easier. You can apply A/B testing to critical changes over the course of the project, and measure it with AARRR to make sure that the changes are consistent with your goals and product strategy. And if your project requires further optimization, you can focus on particular aspects of AARRR, perhaps starting with factors that have a direct impact on AARRR KPIs, such as improving user experience, service design, and CX (customer experience).
One of the first steps on the road towards benchmarking and optimizing your acquisition channels is making sure that your target audience can easily find you. What platforms do you use to widen your reach? Social media, a company website, and app marketplaces are all good options. Next, describing your product and its usage will vary depending on your market. Your message, content and acquisition channels should be optimized to your target.
Your website should meet several criteria. It should be clean, easy to navigate and understand, and accessible to your target. The content and design there should also be persuasive enough to make users click that register, add to cart, or follow button. Make sure you’ve created a proper CTA and an understandable brand message. Consider working on user conveyance to help users land on the registration form and easily submit with success.
To optimize activation, simplify the onboarding experience you provide. Collect only essential data, showcase functionality in a concise way, and make sure users can set up their accounts or meaningfully engage with the app on the first try. Zero state screens are a big plus, and often a crucial aspect of user experience. Build screens for “empty states”. An example would be a view with a list of the user’s paired devices. If none had beed added so far, a helper message should appear, with a call to action (e.g. “add your first device”).
To maximize the perceived value of the app from the customer standpoint, you can make it easier to use a feature that’s your app’s selling point. Additionally, engage in some social interactions. During onboarding, you can ask users to create teams, add some contacts, etc.
To boost retention, provide a valuable notification system. Users should get notifications that matter to their goals and are contextually relevant. Users will not be as interested in news about your company as in the warning that they need to undertake some action that can move them closer to their goals. Let’s consider some examples:
- If your app deals with data security, the notification may contain a suggestion to backup current data, because the user hasn’t done so in a while;
- If your app deals with personal finance and wealth management, you can send periodical reports to the user, presenting an overview of their financial resources and their most recent or impactful actions;
- If your app is an e-learning tool, you may prompt users with new available lectures, or send reminders relevant to their learning plan (daily goals in Duolingo would be one example).
It’s also crucial to remind users about your app in relevant contexts. The end goal is to build habits around your app. This way, you can increase the likelihood of catching users’ attention while they are in the mindset of achieving a goal or completing a task connected with the purpose of your app. Examples include:
- Offering web browser extensions that integrate key functionality with the user’s preferred browser;
- Integrations with tools the user engages with daily (e.g. social media channels)
- Targeted remarketing that’ll help you reengage with those users whose attention you’re about to lose - if your users search for a tool similar to your app, it is a sign that they forgot about your app, or are actively looking for an alternative. It’s a good time to remind them about your solution.
Finally, time-limited actions and expiring content can be your friend. You can make users come back to your app more often by promoting expiring content. Some users will be affected by the vision of being left out, and will return to regularly to get the full benefits your app provides.
A good referral program can help you tremendously. Offer discounts and premium features for active advocates for your brand. For example, for each onboarded user registered, the advocate will get one additional month of premium subscription for free. Additionally, provide recognition and social status signifiers. Award active users on your community forums, making others desire the same recognition and benefits.
You’d be surprised by how many elements of smoothing out revenue streams get overlooked. Step one is to make the checkout process easy and simple. Don’t ask for unnecessary information and let users be done as quickly as possible. Second, remind users about abandoned carts - you can send an email with a reminder after a few hours, or the next day, telling the user that they can still finalize the order. If you think it’s necessary, you can sweeten the deal with an additional discount coupon.
Third, offer payment options that fit needs and habits of the sociodemographic you target. Consider providing many different options, but don’t try to overwhelm users - instead of presenting 10 payment options, you can show the 3 most popular ones, and hide the rest under “More payment options”. If your app costs significant amount of money, adding a “buy now, pay later” option can help push users to take the plunge. We’ve observed a growing trend of users’ interest in payment platforms like Klarna. Finally, consider cross-selling. Offer additional services or power-ups for your app during the checkout process, capitalizing on users’ existing interest in your product.
Investing in user experience design translates directly into ROI growth. You can significantly increase life-time customer value and loyalty, as well as lower the costs of user acquisition, but doing this right. If you don’t have the right expertise on your team, find a reliable partner offering user experience design services.
At iRonin.IT, we’ve delivered many successful, commercial projects. We’ve learned from each one and are happy to pass on this knowledge to new clients. If you need help maximizing the gains of your digital project by assigning UX experts to your team, let us know. We’re ready to help you grow.
Software products expert focused on maximizing business value of products and offering great UX. Crafting meaningful solutions with strategic and analytical approach. In love with design systems, inclusive design and user security.