What Are Pirate Metrics?

What Are Pirate Metrics?

Pirate Metrics – The Marketing Funnel

You may have come here with the connotation that Pirate Metrics stands for the correlation between the number of Pirates sailing on the ocean and global warming…
But, no.
Pirate Metrics was invented by Dave McClure, from 500 Startups. It’s a customer-lifecycle structure that helps in understanding how each step of the funnel works and where to optimize the way the funnel works altogether.

AAARRR – or Awareness, Acquisition, Activation, Retention, Referral, and Revenue is a way of categorizing different metrics and Key Performance Indicators (KPIs).


Many people assume the sole goal of awareness is, basically, awareness. In truth, awareness does much more. It works as a tactic to constantly pull more users lower down in the marketing funnel. Awareness’ initial goal is to build the brand and introduce itself to the market. Although outside of digital marketing awareness can be difficult to track, it’s an important and crucial step for all marketers to consider.

When generating awareness, it’s important to track impressions, CTR, site visits as well as social media awareness which can be generated by likes shares and possibly profile views and new followers.


Why is acquisition important? It’s an important step which gathers information from leads such as name, email, and location. This information is gathered once the user is identifiable through the website and allows to receive further information such as newsletters and promotions.

All of the information gathered in the acquisition step helps marketers build customer personas.  Strong customer personas allow insight into how a brand, product or service should be positioned in order to properly fit the right target market.

With the knowledge of customer personas, campaigns for products and services can be tailored to niche markets and create the most value for each lead.

Facebook is a great tool for tracking lead acquisition and define hyper-specific groups of users that fit your target market. It’s also important to track newsletter or email subscribers or any forms filled for signups (i.e. ebooks, downloads, etc.)


Activation is when a lead spends a certain amount of time on your website, views two to three pages or more, uses a coupon code or is granted a free trial of a product or service. The most important part of the activation stage is that you are offering a solution to the potential customers’ problem. In this step of the marketing funnel, it’s important to track event actions and optimize UX.


Retention is keeping leads around after they buy a product, sign up for a newsletter or download a free trial. Bain & Co summed up the importance of retention for us. They estimated that acquiring one new customer is seven times more expensive than retaining one.

The best ways to retain customers is by sending out email alerts, events, and time-based features and always updating blogs and content.

One of the most important things to remember about email marketing is to avoid sale-like words. If the subject of the email contains words such as “save” or “discount,” it will automatically be classified as junk mail.


Encouraging customers to refer your product service or brand is the best thing you can do for yourself. Customers are more likely to buy from a brand they were referred to by friends or family.

It’s best to encourage referrals from a customer that has had a positive experience with the brand (8/10). Word-of-mouth can serve as a long-term tactic for lead acquisition. Some of the best ways to build strong referral programs are social media or email campaigns and contests.


Revenue is defined by the money remaining after CAC (Customer Acquisition Cost). CAC is defined by all the finances spent on marketing, sales, and meetings in order to entice that customer. If more money is spent on CAC than the LTV (lifetime value), the business will lack revenue and not continue to grow. The ideal LTV to CAC ratio is 3:1.

How can you increase your LTV and decrease your CAC?

  • Funnel Optimization: understand how customers move through the funnel and improve each step to attract the right people more quickly.
  • Pricing Optimization: if products or services are not prices properly according to the target market, the wrong leads will be pulled in due to misplaced positioning.
It’s important to remember, each step of the marketing funnel needs to be understood and function properly. If one step of the marketing funnel is not optimized and causes issues such as leads exiting on important pages or bounce rates increasing, be sure to optimize landing and bounced pages. One issue may indirectly affect the following steps of the funnel.


Links: Pirate Metrics, What Are Pirate Metrics, Start-Up Metrics for Pirates