AARRR vs. RARRA: Which Growth Model Works Best for Your Product?

‍What is AARRR?

Here is the big people definition of what AARRR is and what does it entail

Certainly, let's delve into these concepts more thoroughly.

The AARRR framework, developed by Dave McClure, is more than just a catchy acronym — it's a significant part of the Pirate Metrics hailing from the startup world. It has provided many businesses with clear focus areas in building their pirate metrics and analyzing their customer journey.

So, what’s in these five letters of AARRR?

1. Acquisition: This stage focuses on attracting visitors to your product via various channels. Simply put, the aim is to convert a visitor into a user.
   
   
2. Activation: Once a user is introduced to your product, the next step is activation. This stage involves making the user take the desired action (like sign up or download) within your product.
   
   
3. Retention: After activation, the goal is to ensure users find your product valuable and keep coming back. Retention is a critical AARRR KPI as it measures repeat usage.
   
   
4. Referral: If users like your product, they’re more likely to refer it to others. This stage involves the sharing of your product by users.
   
   
5. Revenue: The ultimate goal of the AARRR framework. This stage is when a user is finally converted into a paid customer.

Does it make sense already? Don’t worry we still got a lot to discover.

Why is the AARRR framework becoming less effective for PLG products?

The AARRR framework was an excellent tool in the traditional market for creating conversion funnels. However, with the rise of Product-Led Growth (PLG) models, its efficiency is being challenged. PLG models, at their core, emphasize 'product usage' as the main driver of customer acquisition, expansion, and retention.

With an AARRR approach, the focus is heavily on acquiring users which leads to an 'Acquisition-first' approach. However, as PLG models thrive on user engagement and product value over straight-up acquisition, this approach could become a bottleneck. Over-prioritized acquisition can lead to pushing people through the funnel who may not necessarily find immediate value in your product—leading to inefficiencies and potentially higher churn rates. A lack of immediate value can lead to lesser engagement and retention, ultimately harming the AARRR metric.

What is RARRA?

RARRA stands for Retention, Activation, Referral, Revenue, and Acquisition. This growth model suggests a paradigm shift—putting user retention at the forefront. By ensuring that users find immediate value in a product, businesses can foster organic growth through referrals, directly impacting revenue and, subsequently, more sustainable acquisition.

Why is the RARRA model becoming more popular among SaaS companies?

In the competitive SaaS industry, user experience and satisfaction are paramount. The RARRA model, with its initial focus on retention and activation, helps companies cultivate a loyal user base that contributes to growth. This methodology aligns more closely with the natural user journey in the digital age, where engagement and value perception precede financial transactions.

AARRR vs. RARRA: What Should You Focus On?

Choosing between AARRR and RARRA hinges on your product’s nature and your business goals. If rapid user base expansion is your aim, AARRR might serve well initially. However, for sustained growth and user satisfaction, pivoting to or incorporating elements of RARRA could be more effective.

We chose RARRA

Here at Dokin, we faced a pivotal moment in deciding our growth trajectory. Initially, we were trying to build a product that would be beneficial to many users and answer several use cases. However, that turned out to be completely wrong, as focusing on acquisition was causing us to increase the number of development hours and the marginal cost of a new customer, all while impacting the perceived value of our product: when you build a product for everyone, you are really building a product for no-one. We then decided to focus on those features and use cases that were sticking around more amongst our users and bringing more money. We started building just for them, and focused on a clear ICP and use case. With a keen focus on fostering a robust and engaged user community, we transitioned to the RARRA model. This shift was not merely strategic but stemmed from our core belief in building a product that users really value. By prioritizing retention and activation, we've seen a significant uptick in organic referrals and revenue, authenticating the RARRA model's efficacy for our product.

Growth Loops and Flywheels: The Next Step

Beyond AARRR and RARRA, there’s a growing interest in leveraging growth loops and flywheels. These concepts focus on creating self-sustaining marketing mechanisms that boost growth exponentially rather than linearly. Incorporating these into your growth strategy could amplify the benefits of the RARRA model.

In conclusion, whether it's AARRR vs. HEART or AARRR vs. RARRA, the essence lies in choosing a model that aligns with your product's vision and customer journey. For us at Dokin, RARRA has not only reshaped our growth strategy but also bolstered our commitment to delivering unparalleled user experiences. As you navigate these turbulent waters, remember that the right model is the one that works best for you and your product.

‍