Growth Metrics

Business goals and product strategy provide a high-level anchor and the AARRR framework breaks down the growth components based on the user journey. We also need a measurable way to track the growth of the company

Metrics provides a measurement of the existing landscape so that you can understand the current state in quantifiable terms.

What are Growth Metrics

• Metrics: A measurable way to assess how well a business is performing against the set goals.

• Growth Metrics: Metrics that are identified to measure the growth of the business. It is usually well aligned with the AARRR framework.

Here are some common growth metrics along the user journey using the AARRR framework. We will be focusing only on Acquisition, Activation, and Retention here since the main focus of this course is user acquisition and growth.

Also, keep in mind that the specific metric you'll be tracking largely depends on the product and business context. The ones listed here are generic, common ones that we often see.

• Acquisition

  • Lead (Visitor) Generation Rate by Channel

    • Different channels (search engine, social media) will have varying effectiveness in driving user traffic to the product landing page

    • A lead refers to a visitor that is successfully routed to the landing page)

    • Generation rate measures how effective a particular channel is in driving awareness of the product.

• Monthly Visitor Sessions

  • The aggregate traffic from different channels (E.g., ads or search engine results) leading visitors to the landing page.

  • This metric shows overall effectiveness in exposing the product to potential users

• Activation

  • Conversion Rates

    • The percentage of visitors on the landing page that actually converted into a user

    • This shows how well we are communicating and helping potential users realize the value of the product.

• Customer Acquisition Cost

  • This metric helps answer "How much do we need to spend to activate a customer?" related to revenue and activation.

  • The hope is that the amount that the customer purchases or spends over time will be higher than the acquisition cost.

• Retention

  • Monthly Active User (MAU)

    • A common retention metric many products/companies use. It usually refers to the number of users who interacted with the product in a meaningful way monthly.

• Churn Rate

  • Customer churn rate captures the users who have left the product either because they lost interest or went to a competitor.

  • A percentage of the users who became inactive or completely opted out of the product within a specific timeframe.

We will be using the AARRR framework to break down growth metrics for Next Lodge in the case study. Given the user-centric nature of this framework, it serves as a good starting point to identify key metrics along the user journey and better understand the business state AS-IS.

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