Pirate Metrics (AARRR)
Created by Dave McClure (500 Startups), the AARRR framework breaks the customer lifecycle into five measurable stages: Acquisition, Activation, Retention, Revenue, and Referral. Instead of obsessing over vanity metrics (page views, downloads), AARRR forces you to identify the one metric at each stage that actually matters — and find where your funnel leaks most. Fix the leakiest stage first.
When to use this framework
- →You're getting traffic but not converting users into customers
- →You don't know which part of your funnel is the bottleneck
- →Your team needs a shared language for growth metrics
- →You're planning your first growth experiment sprints
- →Reporting feels scattered — you need a single-page health dashboard
Before you start
You need basic analytics in place (Google Analytics, Mixpanel, Amplitude, or similar) to measure each stage. Even rough estimates are better than guessing.
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Dropbox (2009-2010)
1. Acquisition — How do users find you?
The top of the funnel. How many people visit your site/app? Where do they come from?
List your main channels and which ones drive the most volume and quality. Include organic search, paid ads, social, referrals, content, partnerships, etc.
Total unique visitors or app downloads per month.
2. Activation — Do users have a great first experience?
The 'aha moment.' When does a new user first experience the core value of your product?
What specific action signals that a user 'gets it'? E.g., 'created first project,' 'invited a teammate,' 'completed first workflow.' Be precise.
Percentage of visitors who complete the aha moment action.
Monthly visitors × Activation rate.
3. Retention — Do users come back?
The most critical stage. If retention is broken, nothing else matters — you're filling a leaky bucket.
How do you define a 'retained' user? Weekly active? Monthly active? What action must they perform? Choose the timeframe that matches your product's natural usage cycle.
Percentage of activated users who are retained over your chosen period (e.g., Month 1 retention).
Activated users × Retention rate.
4. Revenue — Do users pay you?
When and how do users convert from free to paid (or make their first purchase)?
How do you monetise? Subscription, transaction, advertising, marketplace commission? What triggers the conversion from free to paid?
Percentage of retained users who become paying customers.
Retained users × Conversion to paid.
Average monthly revenue per paying customer.
Paying customers × ARPU.
5. Referral — Do users tell others?
The viral loop. Each user who refers others reduces your effective CAC.
How do users refer others? Built-in invite system, word of mouth, social sharing, referral programme with incentives? What's the primary referral mechanism?
Percentage of users who refer at least one other user. Also known as K-factor input.
6. Funnel Diagnosis
Look at the full funnel. Where is the biggest drop-off? That's where you should focus first.
End-to-end conversion rate from top of funnel to paying customer.
Based on the numbers above, which stage has the worst conversion? That's your priority. Don't try to fix everything at once — fix the biggest leak first.
What's one experiment you can run this week to improve the leakiest stage? Be specific about the hypothesis, the change, and how you'll measure it.
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