The life of an entrepreneur is a bit like that of a pirate, since the course entrepreneurs must travel is also often beset by hidden currents that they must navigate. Let us not romanticize this process though. It might be a compelling image to see a pirate behind the wheel, staring off into the horizon, seemingly navigating through instinct alone. But they never did. They used specific tools to help them get from port to port. Similarly, great marketplace entrepreneurs use the right metrics to measure and improve the performance of their online platforms throughout the customer life cycle.
The pirates of the 1700s had an advantage over modern-day entrepreneurs. Although pirates only used a few tools for navigation, they were generally effective in most circumstances. Entrepreneurs, on the other hand, have access to a host of metrics, but only some are right for their particular businesses. It is the challenge of the marketplace owner to not only interpret metrics correctly, but also to choose the right metrics.for their circumstances.
This post is going to dive into the murky sea of online marketplace metrics and teach you how to wrest free the treasure of improved performance from the briny deep. We’ll first introduce you to a crew of standard metrics. Next we’ll introduce you to the AARRR framework (aka Pirate Metrics) and how it helps you organize metrics so that you can get the most out of them. Finally, we’ll discuss how to apply the AARRR framework to an online marketplace so that your business can set sail for success.
Your Crew of Marketplace Metrics
A metric is only relevant if it supports the profitability and customer growth of your marketplace. It doesn’t matter if a metric helped another platform. They need to measure your marketplace performance. Below are a few standard marketplace metrics, but be forewarned; they might not be the best for your business.
This is just a small sample of the available metrics that can be used to evaluate a marketplace platform. It is one thing to understand these measures in isolation, another to combine them into a cohesive system that allows you to evaluate your whole business. That is where the Pirate Framework comes into play.
AARRR — a Framework for Contextual Metrics
The benefit of the Pirate framework is not as a list of metrics, but as a system to contextualise metrics. This distinction is crucial. Metrics are meant to evaluate customer behaviour. But no single metric can ever capture the totality of customer behaviour. Metrics only highlight aspects of why your customers do what they do.
It cannot be overstated that the value of a metric is directly tied to whether it provides insight on how to find, convert and retain loyal customers. The Pirate framework allows entrepreneurs to contextualise metrics by linking them to their marketing funnel. The ‘pirate’ epithet is derived from the ‘AARRR’ acronym which stands for the following stages in the customer journey:
The framework sounds great in theory, but how does it work in practice? The next section will look at utilising the framework to measure marketplace performance.
Anchors Aweigh! Setting Sail with Pirate Metrics
Need a trusty first mate to implement your platform’s pirate metrics? Get in touch!
I sharpened a sense of community when I was a little boy. We were a dozen of kids sharing our lives in playing football and taking part in local competitions to prove we were the best team in the city. When things were rough, I remember selling artifacts to the neighbourhood together or waking up [...]