The essentials
- Definition: the AARRR funnel breaks the customer journey into five stages: acquisition, activation, retention, referral and revenue.
- Origin: proposed in 2007 by Dave McClure under the name "pirate metrics", it structures how digital and software businesses are run.
- How to use it: assign one or two metrics to each stage, find the one losing the most people, and concentrate your effort there before buying more traffic.
- The classic mistake: working on acquisition when the leak is at activation or retention; the extra traffic then drains through the same hole.
The aim of AARRR funnel is a management framework that breaks a customer's journey into five stages: Acquisition, Activation, Retention, Referral and Revenue. Proposed in 2007 by the investor Dave McClure under the name "pirate metrics", it took hold in digital businesses because it forces you to measure something other than traffic. Its main value is diagnostic: by assigning a metric to each stage, you find the one losing the most people, and avoid buying more traffic to feed a leak further down.
The five stages and their metrics
| Step | Question | Metrics | 2026 benchmarks |
|---|---|---|---|
| Acquisition | How do people find us? | Visitors by source, cost per visitor, share of qualified traffic | Cost per visitor from €0.05 organic to €2 in advertising |
| Activation | Do they have a successful first experience? | Sign-up, first use, form, conversion rate | 1 to 3% in e-commerce, 2 to 5% in lead generation |
| Retention | Do they come back? | Returning visitors, 30-day retention, repeat purchase, churn | 20 to 30% repeat purchase at 90 days, churn of 3 to 7% a month in software |
| Recommendation | Do they tell others about us? | Reviews left, referrals, shares, recommendation score | 2 to 5% of customers leave a review unprompted, 15 to 30% when asked |
| Revenue | What do they bring in? | Revenue, average basket, customer lifetime value, margin | An LTV to CAC ratio above 3 |
The historic order puts revenue last, but many businesses move it ahead of referral, since a satisfied customer generally only recommends after paying and getting a result.
Finding the bottleneck
- Quantify each stage over the same period: how many people come in and how many drop out, in absolute numbers and as a percentage.
- Compare against your sector's benchmarks: the stage furthest from its norm is the priority, not the one with the lowest rate in absolute terms.
- Estimate the gain: what a 10% improvement at each stage would bring; a point gained at activation multiplies through every stage that follows.
- Work on one stage at a time: actions are hard to measure when two stages change at once.
- Check the measurement before acting: a stage that looks broken often hides a tracking problem; funnel analysis is described in analysing a conversion funnel with GA4.
A worked example
A site receives 10,000 visitors a month, gets 200 sign-ups (2% activation), of whom 60 return the following month (30% retention), 40 buy (revenue) and 3 leave a review. Doubling acquisition to 20,000 visitors costs several thousand euros and produces 80 buyers. Taking activation from 2% to 3%, through a shorter form and a clearer page, costs a few days of work and produces the same result — while durably improving the return on every future euro of acquisition. That is the reasoning the AARRR framework makes visible.
The limits of the model
- A journey that is rarely linear: a customer may recommend before buying, or come back after six months away; the stages overlap.
- Poorly suited to complex sales: in B2B with a nine-month cycle and several decision-makers, CRM stages (MQL, SQL, opportunity) describe reality better; see MQL and SQL.
- Retention badly defined: returning to a site doesn't mean the same thing for a publication and for a plumber; the metric has to be chosen for the business, as explained in churn.
- The dashboard risk: five stages times three metrics makes fifteen figures — already too many for a board to read; two metrics per stage is enough.
How GreenRed helps
Rather than juggling several tools, GreenRed's overview brings these metrics together in a single dashboard, compares them over time and tells you which actions come first. You can try it free, with no card, from the Pricing.
Frequently asked questions
What is the AARRR funnel?
A framework that breaks the customer journey into five stages: acquisition, activation, retention, referral and revenue. Proposed in 2007 by Dave McClure, it serves to assign metrics to each stage and to find the one losing the most people.
Which metrics should you track at each stage?
Acquisition: visitors by source and cost per visitor. Activation: conversion rate and sign-ups. Retention: returning visitors, repeat purchase, churn. Referral: reviews, referrals, shares. Revenue: revenue, average basket, customer lifetime value. Two metrics per stage is enough.
Which stage should you start with?
The one furthest from your sector's benchmarks, not the one with the lowest rate in absolute terms. A gain at activation carries through every stage that follows, whereas a gain at acquisition feeds a leak if the later stages aren't fixed.
Does the AARRR model suit B2B?
Partly. For a long cycle with several decision-makers, CRM stages (lead, MQL, SQL, opportunity, customer) describe reality better. AARRR remains useful in B2B for the early part, up to the first conversion, and for retaining existing customers.