How to use Dave McClure’s Pirate metrics to direct your product development process?
You build products to make contribution to the business’ bottom line. In order to do this, you need to know how to measure your product’s performance in various stages of customer’s journey with your product. Dave McClure’s Pirate metrics provides a proven framework that many businesses use. If you’re not familiar with this framework, here’s the video of Dave McClure’s presentation.
You’re probably thinking: “This is great! But… how do I apply this into my product development process?” I’m glad you asked. Here’s how:
1. Choose one of the metrics
The metrics are: Acquisition, Activation, Retention, Revenue, Referral. The acronym is AARRR like the noise pirates make, which is why it’s called the Pirate metrics. Which metric to choose would depend on the stage of your product/company. Make sure you get input from your the various business stakeholders whom your product affect.
2. Gather data
Gather both quantitative (user behavior from analytics) and qualitative (user feedback, app store reviews, etc.) to get the baseline (current reality) of that metric. This also gives you an idea of what the problem might be.
After knowing where you’re at, you need to figure out the goal/target number for this metric. Look around and see what the reasonable number should be from your competitors/industry data. Also, look at your business model and figure out what’s the target number you should aim for. This is important because even if you’re better than your peers in the industry, but it doesn’t work for your business, then it’s still not good enough.
look at your business model and figure out what’s the target number you should aim for
3. Validate the problem
Validate the problem you identified from step #2 by conducting user interview/usability test to . If you’re working on a new product, fake it (i.e. use InVision prototype ). This will give you an idea whether it really is a problem, discover new problem(s) and a chance to figure out why problem occurs. In short, you’ll have the problem defined.
4. Ideate on potential solutions.
I normally get the key stakeholders who have decision-making power involved in sketching bunch of ideas and more importantly, get their buy-ins from early on.
As you do this, make sure you keep going back to the metric defined in step #1 because people can get too excited about their idea and come up with cool ideas that don’t help the business (this is how pet projects are born).
5. Turn the solution ideas into experiments
Make sure you state the hypothesis for each experiment (i.e. adding video demo would describe our product’s value more effectively, which will result in 50%+ more sign ups).
Don’t mess with more than one variable in each experiment
Make sure both the action (what you’re doing) and the metric (the number that you’re trying to improve) are clearly defined. Don’t mess with more than one variable in each experiment since that will confuse you when you’re analyzing the result.
6. Build whatever you need to build to run the experiments
It could be a landing page, prototype, actual feature, A/B testing, etc. Work with your team to figure out the cheapest way. Whenever possible, try to avoid building in production-ready code, unless if that’s the cheapest route.
Try to avoid building in production-ready code, unless if that’s the cheapest route
7. Monitor results and communicate it to the team regularly
You’ll see if the hypothesis about your solution from step #5 is correct. As a team, you’ll decide if:
- This solution does improve the metric, so you’ll implement it
- This solution shows potential, but it’s not quite there yet, so you’ll tweak it
- This solution doesn’t work, so you’ll abandon it
Return to step #4 or #5 depending on what you find in step #7 until you believe that you’ve done enough for this metric and you can deliver more value by working on another metric, in which case, return to step #1.
Essentially what you do is to apply the design thinking method to solve both the business problem and you do so by solving the user’s problem. You start with empathizing with the business stakeholders and figure out what is the problem for the business. Then based on that, you go on a nested design thinking process of empathizing with the end-users and define figure out their problem.
I’d love to hear from you if you’re also using the Pirate metrics in your product development process or if you choose to adopt my process above.
This was originally my answer to a question on Quora titled How do you combine a UX design process with AARRR framework?