Pirates Funnel (Growth Hacking Funnel) - Everything You Need to Know!
Growth marketing is the key to comprehensive and rapid business growth. In this discipline, all departments, ranging from marketing and product development to sales, work hand in hand. The various touch points must seamlessly interlock, like gears in a well-oiled machine. The Growth Hacking Funnel, also known as the Pirates Funnel, forms the theoretical foundation for this.
However, how does this framework work, and into what phases is it divided?
The Phases of the AARRR Funnel
Acquisition – This phase is about making potential customers aware of your product or service. Typical channels in this phase include social media (Facebook, Twitter, TikTok, Snapchat, YouTube, LinkedIn, etc.), affiliate marketing, Google Ads, email marketing, and even offline measures such as flyers or posters. Success is measured through analytics of individual platforms and channels to determine the conversion rate.
Activation – This phase focuses on how good the initial user experience is. Typical measures include signing up for the email newsletter, time spent on the homepage (usually more than 20 to 30 seconds), and downloading initial content. This phase is also referred to as user onboarding, and the conversion rate and average dwell time are important metrics.
Retention – This phase concerns customer loyalty, measured in the retention rate. This rate indicates how many users remain active over a defined period after the initial contact. The churn rate (attrition rate) is the counterpart to the retention rate. To ensure sustainable growth, the retention rate should always be higher.
Referral – In this phase, satisfied customers become brand ambassadors who recommend your company. Incentives such as additional free usage or discounts can increase the referral rate, best measured with the Net Promoter Score.
Revenue – Finally, everything revolves around increasing revenue. The goal is to increase revenue per contact or reduce costs per contact. Metrics such as customer lifetime value (CLV) and customer acquisition costs (CAC) play a crucial role. Different tools and systems help analyze revenues and the customer journey to maximize success.
The Evolution from AARRR to A3R3 Funnel
However, the requirements for growth hacking are constantly changing, especially in a time when innovative startups and niche companies play a crucial role. For these companies, it became clear that the classic Pirate Funnel did not always yield the best results. Often, the focus was not on customer acquisition but on creating awareness.
Awareness in the marketing process became more apparent. Startups found themselves in markets where they first needed to inform the target audience about their products or services before entering the customer acquisition phase. In this situation, the A3R3 Funnel was introduced.
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The Role of Awareness in the A3R3 Funnel
The A3R3 Funnel, the “augmented” Pirate Funnel, heralded a significant change in the field of growth marketing. This shift was first introduced by Rishabh Dev on his Medium blog.
The A3R3 Funnel starts with the “awareness” step. This step aims to conduct targeted growth experiments to get the potential target audience’s attention in various scenarios:
- The target audience learns about a need it may not be aware of.
- The target audience learns that your solution is available.
- The target audience is already aware of a need but is unsure if there is a solution. Targeted growth experiments need to be developed to reach them quickly.
- The target audience is not even aware of its own need. It’s about informing them about this need as quickly as possible and then letting them know that you can fulfill it.
Summary
In conclusion, the Pirate Funnel is a valuable tool in many cases to optimize the sales process and drive growth. However, in situations where creating awareness takes precedence over customer acquisition, the Pirate Funnel may not always be the ideal solution.
Here, the A3R3 Funnel comes into play, a groundbreaking addition to the field of growth marketing. This funnel emphasizes awareness as a crucial factor for the growth of startups and niche companies. By focusing on the awareness phase and enabling targeted growth experiments, the A3R3 Funnel facilitates tackling this challenge. Startups can better inform their target audience and embark on the path to sustainable growth.
