How to Apply A/B Test in the AARRR Framework.
In this article, I present how to apply the A/B test in the AARRR Framework by describing the success metrics of customer growth.
Before listing A/B tests for the AARRR Framework; I would summarize what the AARRR Framework is, and why we need it. Then, I give several A/B test alternatives for each step in the framework.
What is AARRR?
AARRR Framework, which is proposed by Dave McClure, is a 5-step technique that addresses the metrics of the customer lifecycle of a start-up. The short description of each step of the AARRR Framework is presented as follows:
Acquisition: Empower awareness of your business and focus on how to gain maximum awareness cost-effectively and in a short period of time.
Activation: Convince people who already know your business, to sign up or buy your product for the first time.
Retention: Keep your customers for life and motivate them to come back again and again.
Referral: maximizing referrals by several techniques such as word-of-mouth.
Revenue: Increase cash flow and revenue of your business using payment models.
For more detail, please watch the video below before reading this blog post.
Why do we need it?
The AARRR framework facilitates measuring the growth metrics of your business while giving a clear understanding of your customers’ journeys with your product. Besides, well-defined steps provide unique metrics for your business.
What is an A/B Test?
The motivation behind A/B testing is to compare different strategies (channel, feature, design, etc) to find out the best performing one for improving your product. Using different colors on the same button or presenting different home pages can be considered as the examples of A/B test. Note that, A/B testing is not limited to UI/UX design, it can also be used to compare different business strategies. The key point in an A/B test is to use correct metrics to find out the best method among the alternatives.
How to use A/B testing in the AARRR Framework?
There are many A/B test methods that can be used in your digital products. In this post, I summarize some of these methods and metrics by grouping them under the AARRR steps.
Acquisition is the first step of the AARRR method. The main focus of this step is to gain maximum awareness of your potential customers in a short period of time. After conducting the A/B tests, you should analyze the conversion rates, costs, and traffic volume of each channel, then focus on the best one to maximize the acquisition of the people. You may also use some metrics such as click counts, number of visited pages, duration time of the users in your pages in this step. Some of the A/B tests you can use while acquiring your customers are:
- Search Engine Advertisements: Google Adwords vs Yandex Direct
- Content Marketing: Medium.com Blog posts vs In-house Blog posts
- Social Media Posts: Facebook Posts vs Instagram Posts
- Video Advertisements: TV vs YouTube Advertisements
Activation is the second step of the AARRR Framework. The main goal of this step is to activate “engaged” people who already know your business. Users who have downloaded your application but haven’t registered yet can be categorized as “engaged” people or users. For a mobile application, what activities your users do after they downloaded your application would be a critical sign of your business. You can use the following A/B tests to motivate “engaged” people to register your application or shop for the first time.
For registration:
- Registration notifications: Registration pop-ups vs Banner at the header section
- Registration campaign: Register now and get a % 10 discount vs Register now and get free shipping.
For the first buy of registered users:
- SMS Shots: Send discount messages vs promotion messages in SMS shots.
- E-Mails Shots: Send top-selling products vs new products in e-mails.
- First buy campaign: Send first buy discounts by SMS vs e-mail.
- Buy now campaign: Buy now discount vs buy now and get promotion code.
Retention is the third step of the AARRR framework. The main goal of this step is to convince your customers to come back again and continue shopping. Shopping intervals, the regularity of the usage of your product, customer acquisition rate, and customer churn rate are some of the metrics you may use while calculating the retention of your product or business. You can use the following A/B tests to motivate your customers to come back again and again.
- Getting feedbacks: Ask customers opinions about their shopping experience after 1 week vs 1 month.
- Contacting your customers: Sending automated thank-you messages via e-mail vs SMS.
- Special offer e-mails: “Discount at these 5 products” vs “Discount at these 2 product categories”
- Send online messages using chat-bots: “You may also like these products” vs “You missed this product in your last purchase, today you can buy it with a 10 % discount”
Referral is the fourth step of the AARRR Framework. This step addresses word of mouth to maximize the references for your product. The main goal of this step is to convince loyal customers to refer your product to others. Net Promoter Score and Viral Coefficient are the key metrics in this step. You can use the following A/B tests on the homepage of your product to connect with more prospective customers.
- Enable sharing purchase: “Share your purchase on Twitter and get %5 discount” vs “Share your purchase on Facebook and get %5 discount”
- Invite others for discount: Invite your friend and get %10 discount vs Invite 3 friends and get %20 discount
- Invite others for a promotion: Invite your friend and get a free product vs Invite your friend and get a 50$ discount coupon.
Revenue is the last step of the AARRR framework. After ensuring a nice cash flow you may need to increase the revenue of your business. This step aims to increase the revenue of your business by increasing cash flow and decreasing costs. Customer lifetime value, minimum revenue, break-even revenue, and average order value per-use can be used as the key metrics to measure the success of this step. You can use the following A/B tests in the revenue step.
- Payment model: Pay-as-you-go vs subscription model
- Subscription method: Pay-per-month vs Pay-per-year
- Volume-based pricing: Bandwidth-based payment vs Time-Based payment
Last word
In this article, I have summarized the AARRR Framework and list several A/B test methods for each step of the method. As shown, although AARRR is not a new technique, it is one of the best alternatives to manage the customer growth of a startup regarding several metrics.
References
2- Growth Hacking for Ecommerce: 20 Tactics You Can Try Next Month
3- AARRR Framework- Metrics That Let Your StartUp Sound Like A Pirate Ship
