I really like tability.io's AARRR funnel-based approach to defining your company objectives.

What is the AARRR funnel?

The the AARRR funnel (aka “Pirate Metrics”) is, in internet time at least, an age-old framework that divides your users' journey — into 5 steps:

1. 🪰 Acquisition: how do people discover you?
2. 🕷️ Activation: how many of those people actually try your product?
3. 🕸️ Retention: how many of those users come back?
4. 🐜 Referral: how many of those users tell their networks about you?
5. 🦟 Revenue: how many of those users convert into paying customers?

Once you've answered these questions and have these insights at hand, you should start to get a sense of which areas of your funnel could use some extra TLC next quarter, so to speak. 🤧

How to Set Company Objectives to Satisfy Every Stage of Your Funnel

Your funnel priorities can be mapped against the stages of your product lifecycle, as follows:

Before we list specific goals and OKRs most relevant to each funnel priority, here's a brief refresher on the stages of the Product Lifecycle.

Your Quick Guide to the Stages of the Product Lifecycle

1. 💡 Introduction
2. 🌱 Growth
3. 🧓🏻 Maturity
4. 💀 Decline

1. 💡 Introduction

Sometimes people build before they validate; sometimes people validate before they build. Either way:

Your Product is in the Introduction Phase of its Lifecycle if:

• you haven't yet nailed the product-market fit
• you might not have launched yet
• you definitely aren't profitable

Questions You Might Still Need to Answer in the Introduction Phase Include:

• Which problem/s do we solve, how, and for who — exactly?

• Where do our potentially biggest fans live (online)?

• What's the existing narrative in our space, and who is influential?

• How are we disrupting and improving on the status quo?

"Infusing our output with critical thinking, new visions, and expansive transgressions opens up many more possibilities than it closes down. Scan for places where potency lies, get together, and start looking beyond the present." — Jess Henderson, ‘Offline Matters: The Less Digital Guide to Creative Work’

2. 🌱 Growth

You'll Know You've Hit the Growth Phase When:

• you're seeing an unprecedented increase in sales

• you're talking a lot about how best to promote new product features to existing users

• your competitors know who you are

"How are you positioning your product? If your current product is more advanced than competitors, you may be best positioned to earn a dominant market share—which means pushing more resources into current campaigns (at the expense of near-term profits)." — Derek Gleason for cxl.com

Questions You're Probably Asking Yourself in the Growth Phase Include:

• Who do we need to hire right now?

• What are our departmental budgets and targets?

• Which potential partnerships are worth pursuing?

• How fast can the product team push this update?

3. 🧓🏻 Maturity

Signs Your Product Has Reached Maturity May Include:

• you enjoy near-universal brand recognition
• you have thousands of competitors
• you're consistently profitable

Questions You Should be Asking Yourself at Maturity Phase:

• What are the factors that may lead us into Decline?
• Are we effectively differentiating ourselves in a saturated market?
• Who and where are the new audiences we should be aiming to reach?

4. 💀 Decline

"No matter how good your product is, it obeys the rules of the product life cycle." — Kateryna Mayka for eleken.co

You'll Get that sick Decline Stage in Your Stomach Feeling When...

• users are not willing to pay for your product or service (aka it's no longer needed)
• your competitors are launching better features faster than you
• emerging tech starts making your product look obsolete
• there's a massive financial crash or change in legislation that negatively impacts your business

Questions to ask when you're in Decline:

• How can we reduce spend and run on brand mileage?
• What's our rebrand, pivot, or exit strategy?
• What's no longer adding any value, and how can we milk what’s left?

How to use the AARRR funnel to set OKRs for your product at every stage of its lifecycle

Here are those Pirate Metrics one more time:

1. 🪰 Acquisition (how people find you)
2. 🕷️ Activation (how many of those people actually try your product)
3. 🕸️ Retention (how many of those people come back again, and again)
4. 🐜 Referral (how many of those people tell their people about you)
5. 🦟 Revenue (how many of those users convert into paying customers)

Now let’s get into how to set OKRs based on where your product’s at and which funnel metric you need to prioritize over the next few quarters.

1. 🪰 Acquisition

Prioritise Acquisition when your product is in the following phases:

• Introduction
• Growth
• Decline

What's the Definition of Acquisition in the Product Lifecycle?

Acquisition in growth or product marketing refers to efforts made to acquire new audience members, users, and/or eventually paying customers.

• SEO
• Paid Search and Social Advertising
• Content Marketing
• PR
• TV, Print and Billboard Advertising
• Going on Shark Tank, etc.

How to set Product Acquisition OKRs

Here are a few examples of how you might go about writing your OKRs if you wanted to focus on acquisition for the next six months:

• key result 1: grow collective social media media communities to 100,000,000
• key result 2: achieve 2,000 podcast downloads per episode

• key result 1: generate 10 meaningful press mentions around new/differentiating features
• key result 2: activate 1,000 new users on the pro/team plan

• key result 1: grow Discord community to identify 1,000 highly engaged brand ambassadors
• key result 2: optimize funnel to achieve 1,000 new subscriptions/month based on all site traffic
• key result 3: reshare and comment on ALL tagged posts on social media (15+ / week)

2. 🕷️ Activation

Prioritise Activation when your product is in the following phases:

• Introduction
• Growth

What's the definition of Product Activation?

Unlike the (sometimes) prone to vanity metrics related to acquisition, product activation indicates how many of those vaguely interested people actually take an action to engage with your product in a way that's beneficial to both themselves, and your business.

"Activation happens when a registered user becomes a qualified lead. At this point, you need to evaluate if the specific circumstances that are necessary for that person are present and, if they are ready to become a customer." — Theodore Moulos for growthrocks.com

Examples of activation campaigns and strategies will be unique to the product or service in question, but I really like Dan McGaw's way of looking at it:

• "The activation event has to be meaningful in terms of the value delivered to the customer.
• It’s strictly a one-time event.
• It signifies your business’ effectiveness in getting customers to realize value from your product or service."

How to set Product Activation OKRs

As aforementioned, OKRs related to product activation will defer depending on your marketing strategy (sales-led, marketing-led, product-led..?) but for the sake of scalability — let's assume a product-led, freemium offering; designed to draw in a large pool of non-paying but active users before converting a percentage of these into paying customers, using automated (content-led) methods.

• key result 1: attract 10,000 new active users
• key result 2: nurture 10% of new users over to pro/team plan

• key result 1: attract 10,000 new active users
• key result 2: nurture 10% of new users over to pro/team plan

3. 🕸️ Retention

Prioritise Retention when your product is in the following phases:

• Growth
• Maturity

What's the Definition of Retention?

Retention might just be marketing's most lasting buzzword but, TBH, I fully agree. What better indicator of the success of your product than proof that people can't stop using it? If retention is lifecycle marketing's golden child, churn is her evil step-sister.

You can measure your churn rate as follows:

(Lost Customers ÷ Total Customers at the Start of Time Period) x 100. 

So, for example, if your app had 1,000 active users at the beginning of the month, and 450 of them have unsubscribed or become inactive, your churn rate for this month was 45% (and you might want to take another look at the assumptions you made around your product market fit).

Your priority in Retention is to make the churn rate lower than your customer acquisition rate. Otherwise, growth can’t be achieved. The last few years, a big emphasis is put into the Retention channel by many growth marketers, and for a good reason. First, it’s a lot cheaper to retain an existing customer than acquiring a new one.

At the beginning of the funnel, you were trying to build awareness through channels such as Facebook ads, Google ads, influencers, content marketing, etc. And, as you know, none of these channels comes for free. By Retention stage, you should have established communication channels in your own properties."

— Theodore Moulos for growthrocks.com

• Newsletters
• Trigger-based email automation
• Push notifications
• In-app messengers and chatbots
• Gamification
• Rewards / loyalty programs
• Customer surveys
• Product personalization
• User feedback loops
• Sending glitter through the physical mail, etc.

How to Set Product Retention OKRs

• key result 1: overhaul email strategy to decrease unsubscribe rates by 5%
• key result 2: improve our monthly churn rate by 10%

• key result 1: fix all the bugs marked "users are fleeing ‼️ " in the backlog
• key result 2: send monthly "have you tried this" emails to promote new features

4. 🐜 Referral

Prioritise Referral when your product is in the following phases:

• Growth

What's the Definition of Product Referral?

Think about how you came to know all the best products you use. More often than not, you tried it because a real human you know (either personally or on TikTok) told you it was good shit.

Us humans are just wired like that, and that's why referrals are the best growth tactic in the game.

"To really drive referrals you need to have a systematic process in place that incentivizes and generates them on a consistent basis."

— Melanie Balke

• One-click social sharing
• Incentivized referral campaigns (often in email newsletters)
• Google and app store reviews
• Online user reviews and testimonial prompts
• Net Promoter Score (NPS)
• Podcast reviews
• Youtube comments
• Product write-ups and reviews
• Buying celebrity video endorsements via Cameo and then promoting them on Tiktok, etc.

How to Set Product Referral OKRs

• key result 1: spend 20% of marketing budget on rewarding employees for online referrals, reviews, and testimonials
• key result 2: team to collectively publish 30+ interviews with real users

• key result 1: spend 20% of marketing budget rewarding users for online referrals, reviews, and testimonials
• key result 2: increase our total referral traffic by 25%

5. 🦟 Revenue

Prioritise Revenue when your product is in the following phases:

• Introduction
• Maturity

• Pricing model testing and experimentation (for example “pay as you grow”)

• Automated upselling/cross-selling campaigns

• Payment automation

• Abandoned cart emails

• Content, site, or product monetization strategies

What's it Going to Take for Your Startup to Turn Profitable?

This the freemium-first world of SaaS, this can be one of the most controversial choices you make.

You could limit access to features that were previously free in order to force the upsell... but you risk pissing off a lot of people. You could pump your freemium level product full of ads to educate users about the benefits of paying up... but, ditto.

Personally, I really love the circular idea of ideating until you figure out a way of helping your users make money off your product, somehow someway.

How to set Product Revenue OKRs

• key result 1: optimize our funnel to process our first 1,000 automated payments
• key result 2: respond to first 1,000 messages from customers via our new chatbot

• key result 1: deploy 3 user-requested features to premium tier to encourage levelling up
• key result 2: signup 1,000 freemium users for a no credit-required free trial month

💭 Product Managers, Marketing Directors, CEOs; I’d love to hear your feedback on this approach to setting product OKRs.

Why not get your commentary published on HackerNoon? 😉

See you around Planet Internet,

Natasha ✌️💗 ✨

Article Resources

1. OKRs for Startups by tability.io
2. AARRR vs. RARRA: Which is Better? by Emily Bonnie for clevertap.com
3. Offline Matters: The Less Digital Guide to Creative Work by Jess Henderson
4. Product Lifecycle Marketing: What Matters Most at Every Stage by Derek Gleason for cxl.com
5. Decline Stage of the Product Life Cycle – How to Handle It by Kateryna Mayka for eleken.co
6. AARRR Framework: 10 Steps to Building a Growth Funnel by Theodore Moulos for growthrocks.com
7. This “OKRs from a development team’s perspective” thread on HackerNews
8. AARRR Framework- Metrics That Let Your StartUp Sound Like A Pirate Ship by Melanie Balke
9. SaaS Marketing: 30 Examples of What Works by Aaron Brooks for ventureharbour.com