Famous for its power to track the performance of an eCommerce business, AARRR metrics has gained the trust of website owners. Therefore, learning to use it properly is a great way to survive and flourish in this hot industry. The following article will help you explore AARRR metrics for eCommerce in depth.
What Is AARRR Metrics for eCommerce?
Developed by Dave McClure, AARRR metrics consists of several data analysis techniques that aim at promoting sustainable development.
AARRR stands for acquisition, activation, revenue, retention, and referral.
Although the metrics are the most compatible with SaaS, or software as a service, companies, eCommerce owners can benefit considerably from AARRR metrics. It promises to bring about a consistent growth to online stores.
Unlike SaaS with revenue following retention, online businesses follow the reverse order. In other words, placing an order happens before repeating purchases.
Components of AARRR Metrics for eCommerce
As suggested by its name, the acquisition means acquiring visitors. The majority of viewers land at your website via search engines such as Google or Bing, pay-per-click ads like Google AdWords, and social networks, namely Facebook or Twitter.
In this stage, you will measure the performance and movement of each traffic source through the AARRR funnel, thereby determining which marketing channel is ineffective or works best for your business.
There are some metrics available to help with the acquisition stage, notably Visitors By Marketing Channels and Low Performing Product Pages.
The next stage comes up when a user makes his or her very first interaction with your online store. It can involve creating a new account, subscribing for a newsletter, browsing category pages, adding products to the shopping cart, and entering the checkout process.
To enhance activation, you’d better give out exclusive deals to those subscribing to your newsletter. Even if customers leave your page, it’s possible to reach out to them and remind them to return later.
In the eCommerce world, revenue means placing an order, including purchases of first, second, or repeat visitors. Based on your customers’ average spending, there are three main metrics to deal with revenue assessment:
- Customer Lifetime Value: This indicates the total amount of money a customer spends on the products from a specific store throughout his or her relationship with it
- Average Order Value: It maps out how long it takes a customer to place an order
- Net Profit: It is the actual amount of profit that a store can receive after counting in all investment expenses
Try to keep your checkout process flawless, clean and optimized for the mobile interface so that the Activation to Revenue conversion rate will increase.
This stage deals with how frequently customers keep on returning to your store, from which you can assess their trust and satisfaction with your business.
Your retention performance is vivid through two prominent metrics: returning customers and churn rate. The former tells the number of people making the second or third purchase while the latter points out the percentage of customers wanting to end their relationship with your store.
Referral implies the rate at which your users recommend your site to their family members or friends, done through the metrics of Net Promoter Score.
Your customers fill in a survey to express their willingness to refer your store to others. Afterward, they will fall into three groups, namely Promoters, Passives, and Detractors on the 0 to 10 points rating scale (0 means not at all likely, and 10 equals to extremely likely).
Thanks to AARRR metrics for eCommerce, it’s now possible to keep a record of customers’ journey from the acquisition to referral stage, thereby devising appropriate strategies to foster sales.