AARRR Metrics Apply To All Businesses

I recently dealt with a company that had an odd requirement that I come to their office to sign a contract so that they can remodel part of my house. Note, this is the second job I’ve had them do. This never happened before and I thought it was an odd occurrence seeing how the previous transaction went off without a hitch. Their office is about one hour from my house (Phoenix metro is a huge urban sprawl). Knowing the pain of traveling this distance and the related traffic I asked if they could email me the contract, I’d then sign it (using HelloSign or a related service), send it back and then call them up to make the down payment over the phone/etc

They refused. 

They insisted I come to their office to sign the contract make the payment and then they’d schedule a time to come out and start the work. This is where the problem is situated – the majority of common traditional blue collar businesses (landscaping, pool service, house remodelers, electricians, plumbers, etc) have not advanced into the digital age. I realized this and decided to help them by guiding them into a services that would work for their company. All of contract and payment process can be done virtually without a face to face meeting. With many people being professionals these days, its hard to find the time to drive across town to sign a piece of paper and give them a credit card in between work, clients, wife, children family, etc. I found this interesting because this simple little request that they are insisting upon causes me some grief. I then realized, AARRR Metrics apply to all businesses. But by denying a customer request based upon the simple requirement of a signature and check is ludicrous. In fact … 

This is how you lose a customer and lose referral business.

This is the Referral part of the AARRR metrics by Dave McClure. The lesson to learn here is: convenience the customer do not burden them if a solution is there. Go above and beyond for them. You never know when this person will refer the next million dollar deal for your company. Do the customer wrong and you will have probably lost a customer and any additional referrals they can provide. 

Startup Metrics – AARRR Model Applied

This world is connected in many ways and each interaction you make has a lasting impact on the person and your referrals. If you follow Dave McClures AARRR metrics (slides, video) you’ll notice this company failed the second R. Yes, I know this is not a startup I’m talking about but the same rules apply for almost all businesses. The AARRR metrics are: 

• Acquisition – users come to the site (or business) from various channels (we found them through yelp)
• Activation – users enjoy 1st visit. “happy user experience”. 
• Retention – users come back, visit site multiple times
• Referral – users like product enough to refer to others
• Revenue – users conduct some type of monetization behavior

How They Failed and How They Could Improve

Unfortunately the company I dealt with failed the referral section. As you can see it sits tangental to the acquisition/activation/revenue stream but its still a very important aspect of business. Referrals are huge. My business has been very successful because of this. Fail the referral step often enough and you probably won’t be collecting any additional revenue. The company I speak of above had already acquired me, activated me (I used them to remodel my bathroom and didn’t have this issue) and I had retained me (I came back and had more work for them) and they were retaining me (emailing and calling me about a quote I got). They made revenue, but they really failed the referral route because I probably won’t use them in the future if this is the standard procedure. Strong arming a customer into a position that they are uncomfortable about is unnecessary and should be avoided at all costs. Improving this is simple. They can simply use HelloSign and a either key the transaction themselves over the phone or they can use another payment processor to handle the payment. If the company does not want to pay the transaction fee they can roll that into their cost of goods sold so that it does not affect their bottom line. This way, customers are given a convenient way to interact and the business has the opportunity to bloom through referrals and time savings. 

The bottom line is … if you own a business and someone says over the phone “I like your product – here’s my money, take it” and you say “No I don’t want your money like this. I want this money hand delivered to me, tomorrow” don’t be surprised if you don’t land them as a customer.  

If you remember the simple AARRR acronym you’ll be surprised how your actions are redefined so that they help your business. In turn your bottom line will hopefully continue to  follow an ‘up and to the right’ trajectory. 

As a final note, I was able to gently guide the company I was dealing with into agreeing that a digital (or more convenient alternative) was best as they would still land the deal and the customer (me) would still remain happy. I’m continuing to educate them on the various digital options that are available to help their business which in turn will help their customers.