Customer Lifecycle Marketing with Pirate Metrics

This post originally appeared on the ActiveCampaign marketing blog.

Last week I outlined how I have adopted Pirate Metrics to work as my guiding framework for customer lifecycle marketing. As a refresher, Pirate Metrics is AAARRR (get it?), which stands for Awareness, Acquisition, Activation, Revenue, Retention, Referral.

If you haven’t read the first post, I suggest you head on over there and cruise through it. It should only take a few minutes; I’ll wait.

This week I am going to take Pirate Metrics a bit further, to demonstrate how you can use the framework to maximize the efficient use of your scarcest resource — your time.

The first step is to map out the shape of your funnel, based on the “metrics to measure” from the previous article.

You should do your best to be as scientific as possible about this, but you can start with a rough sketch.

A “hypothetical” funnel might look something like this:

Notice there is a very wide Awareness stage and the following stages progressively decrease as leads, customers and ambassadors progress through the customer lifecycle.

It is very unlikely that you’ll have such a textbook example of a funnel. In reality, your funnel will probably look like a variation on this:

In the above example, the stages of the funnel narrow as your pool of customers becomes more focused and leads become more viable. The narrowing segments represent the conversion percentage (C%) of your customers moving through the different stages of the customer lifecycle.

Working in this way, it becomes easy to visualize where we should be spending our time. In our example, the most obvious drop-off is after the activation stage. We are unable to convert acquired leads into activated trial customers relative to our other stage conversions.

We should take care not to abandon those subscribers, and instead we should focus our resources on nurturing them towards trial activation or revenue — instead of spending our time building awareness via advertising channels.

It is really tempting to think about “marketing” as only those top of the funnel objectives like Awareness, Acquisition, and Activation.

If you don’t have an adequate framework in place to support the entire customer lifecycle then you will only end up wasting resources at best, and at worst, overrunning your sales, success, and support teams with zombies.

Funnel Geometry

So far, we have only discussed the width of the stages in the Pirate Metrics funnel. The other component — the height, represents the length of the product purchase cycle.

It is important to understand the typical length of the purchase cycle for your business and industry. Consider the following funnels for two very different companies.

You can think of height of a stage as representative of the time it takes for a contact to move through that stage.

If you stop communicating with a contact, then you will lose their attention, and they will ultimately go elsewhere to satisfy whatever urge it is they are trying to satisfy. In other words, they will drop out of your funnel.

It is your job as a marketer to continue to move the contact forward through the stage with careful communication. Don’t practice what my teammate Chris Davis calls “hope and pray marketing.”

Therefore, the height of the funnel is also related to the number of conversion events, or touchpoints required for a contact to progress to the next stage.

For example, you might learn that it requires 4 lead-nurturing emails on average to move a contact from the acquired stage to the activated stage, or that retention increases by 4% if your customer adopts 7 key features instead of 5. In this way, you are able to decrease angle A (in the figure above) by lengthening the time spent in the stage.

You must take care to find the appropriate cadence between your communication events. When considering the height of funnel stages, it is important to keep in mind the balance between introducing new events, and over or under whelming your customer.

Over-communicate to your contacts you run the risk of turning off customers by spamming them. Under-communicate and you risk being forgotten.

Different Customer Lifecycles for Different Customer Personas

So far, what we have been describing is your funnel in aggregate. However each customer lifecycle journey is different.

It is too much to cover in this article, so stay tuned for an upcoming blog post on events and attributes, but it is important to keep in mind that there is not a single funnel. That is why it is so important to understand your customers, and send the right message to the right person, at the right time.

If you sell marketing automation software for example, the customer lifecycle journey of an enterprise CMO will look substantially different than a solopreneur.

If you sell newborn photography, the customer lifecycle journey of a father will be different than a mother, or even a grandmother.

Once you feel confident sketching the funnel out for your entire customer base, try segmenting customers based on different customer personas.

Conclusion

Like humans and snowflakes, there is not one perfectly shaped funnel. Each funnel is beautiful in its uniqueness and matched appropriately to the business and customers it is meant to describe.

Use these Pirate Metrics to provide more structure to your customer lifecycle marketing. You can then use this structure to understand your customers, and your business and as a guiding framework to identify opportunities inside your organization in an effort to better optimize your time.

Originally published at www.activecampaign.com.