In a crowded product world, having a clear growth framework separates teams that stall from those that scale.
Did you know that around 90% of startups fail within their first five years? And much of that comes down to weak retention, unclear activation, or poor revenue paths.
The AARRR framework offers a simple yet powerful lens to map the user journey, align teams, and pull the right growth levers, especially for subscription-first businesses in 2025.
In this guide, we’ll cover what it is, why it’s still relevant, and how growth teams can apply it to subscription businesses today.
AARRR stands for acquisition, activation, retention, revenue, and referral
The framework helps teams avoid vanity metrics and focus on sustainable growth
To build an AARRR pirate funnel, define your aha moment, set KPIs, run experiments, and iterate regularly
Purchasely is an app experience platform built to help mobile teams turn engagement into revenue by optimizing and measuring the full AARRR funnel. Get in touch to find out more.
Also known as the Pirate Metrics framework, AARRR breaks the customer journey into five stages:
Acquisition: how people discover your product or service.
Activation: when a new user experiences the “first value moment.”
Retention: whether users come back or stay loyal over time.
Revenue: how you monetize, convert free users, subscriptions or in-app purchases.
Referral: when users bring in more users — word-of-mouth, invite loops, viral sharing.
And why is the framework also known as pirate metrics? Because “AARRR” sounds a bit like a pirate’s “Arrr!”, of course!
Back in 2007, Dave McClure, founder of 500 Startups, saw founders obsessing over vanity metrics.
Sure, page views and press coverage looked good. But they told investors nothing about growth.
McClure simplified things into five essential stages: acquisition, activation, retention, revenue, and referral.
This came at a time when product-led growth was just beginning to take shape:
Facebook was scaling rapidly
Dropbox was pioneering freemium
Mobile apps were redefining distribution
The AARRR framework gave teams a way to track progress through the customer journey without losing sight of what mattered most: real users creating real value.
Seventeen years later, the framework is still here.
Today’s app businesses use it to measure everything from acquisition efficiency and activation rates to retention patterns, revenue performance, and referral impact.
What has changed isn’t the framework itself, but how precisely growth teams define and improve each stage.
You should use the AARRR framework because it gives a clear, structured way to measure how users move through your app, from first discovery to long-term loyalty.
Here’s why growth teams continue to rely on it:
It keeps focus on the customer journey instead of vanity metrics
It aligns marketing, product, and revenue teams around shared goals
It scales from early traction to enterprise-level optimization
It works across models, from SaaS to mobile apps to ecommerce
The framework also makes analytics actionable.
For example, marketers can track acquisition metrics without losing sight of activation. Product managers can measure how onboarding flows influence retention. Revenue teams can see how paywall tests affect conversion rate without increasing churn.
Consider Calm, which measures retention by tracking daily meditation sessions — a simple but powerful signal of habit formation.
Runna takes a similar approach by treating the first completed workout as its key activation event, ensuring visitors feel immediate value.
Both examples show how defining a single clear metric at a critical stage can drive app engagement and long-term growth.
The best way to understand the AARRR framework is to see how each stage translates into specific, measurable metrics. Let’s take a look.
User acquisition is about how new customers discover your app. It’s the entry point and often the most expensive stage to scale.
The key is to go beyond surface-level numbers like app installs and measure the efficiency of each acquisition channel.
Common acquisition metrics include:
Cost per install (CPI) to measure paid efficiency
Customer acquisition cost (CAC) for a broader view of spend versus return
Organic vs. paid acquisition mix, including SEO traffic and app store discovery
Acquisition is only meaningful when it sets up the next stage of the journey. An ad click might deliver a new customer, but if they don’t activate during a free trial, the cost is wasted.
Headspace invested heavily in SEO to capture demand from potential customers searching for meditation and sleep support.
By focusing on organic acquisition rather than only relying on ads, they built a sustainable flow of potential customers while keeping CAC under control.
That mix of efficiency and scalability is what makes acquisition metrics so critical in the AARRR funnel.
Activation is the moment when a visitor first experiences the value of your app.
A strong activation metric captures when users reach that “aha moment” where the product feels indispensable.
Activation metrics often include:
Percentage of users completing onboarding
Time-to-value (how long it takes for a user to reach their first success)
Feature-specific milestones like first playlist created, first workout logged, or first transaction made
What matters most is identifying the action (or actions) that signals real progress.
This isn’t about tracking everything, but about finding the activation metric that best predicts retention and revenue down the line.
Duolingo increases the chances of activation by tailoring the experience from the very start.
New users are asked about their existing language knowledge and learning goals, then matched with a personalized starting point.
Beginners are eased into foundational lessons while advanced learners can skip ahead to more challenging content.
This adaptive approach ensures every subscribers experiences quick wins, making activation more likely regardless of their skill level.
Retention measures whether users return to your app over time.
It’s one of the most important stages because without retention, acquisition spend and activation wins don’t matter.
Strong retention metrics show that users are finding lasting value and building habits around your product.
Key retention metrics include:
DAU/MAU ratio, a measure of stickiness
Cohort retention to see how usage holds up week by week
Churn rate to track how many users cancel or disengage
Retention metrics reveal whether the product delivers ongoing value. A short spike in usage after sign-up means little if users disappear after a week.
Sustainable growth comes from creating repeatable behaviors that keep people coming back.
Apple Fitness+ keeps users coming back not just through workouts, but through programs that surprise and delight.
One standout is Time to Walk, an audio experience on the Apple Watch where guests — ranging from athletes and artists to authors — share stories, life lessons, and curated music as users walk.
Another is the Artist Spotlight series, where entire workout playlists are dedicated to a single artist like The Rolling Stones or Mary J Blige.
These programs keep content exciting and predictable, helping users build long-term habits and making churn less likely.
Revenue is where your app proves its business model.
For subscription-first businesses, this often means converting free trial users into paying customers and keeping them engaged long enough to renew.
Key revenue metrics include:
Average revenue per user (ARPU)
Customer lifetime value (LTV)
Free-to-paid conversion rate
Monthly recurring revenue (MRR)
For growth teams, optimizing revenue means more than adjusting price points. It’s about testing paywalls, refining upgrade prompts, and ensuring app monetization aligns with user experience.
Done well, these improvements strengthen both conversion and retention rather than trading one for the other.
Strava has built a strong subscription business by balancing free and premium features.
By placing popular features like advanced analytics and route planning behind a paywall, the app nudges engaged athletes toward upgrading.
Strava’s focus on continuous paywall testing and premium feature alignment helps increase both conversion rate and long-term retention.
Referral is the final stage. It measures how much growth comes from your own users spreading the word.
Strong referral metrics reduce acquisition costs, extend reach, and signal that your product delivers enough value for people to recommend it.
Key referral metrics include:
Referral rate, or the percentage of users who invite others
Viral coefficient, which measures how many new users each existing one brings in
Referrals work best when they’re built into the product experience.
A thoughtful incentive or a simple sharing mechanism can turn satisfied users into active promoters, fueling organic growth that compounds over time.
Uber’s referral program became legendary by offering free ride credits to both the inviter and the invitee.
This two-sided incentive created a viral loop where users had a clear reason to share the app with friends.
As a result, referral metrics became a major growth driver during Uber’s global expansion, proving how powerful this final stage of the AARRR funnel can be.
So how do you move from theory to practice?
The answer is to start small, focus on the right metrics, and build momentum through consistent iteration.
This quick checklist gives teams a way to embed AARRR into their mobile app strategy today:
Define the activation event that signals the first value. Pinpoint the exact moment a new user experiences success — the action most likely to predict long-term retention.
Map the full customer journey from acquisition to referral. Visualize how users flow through and where interest fades, from first touch to potential sharing.
Select one primary metric for each stage. Keep it simple. One north star metric per stage makes analysis clearer and keeps teams aligned.
Establish a baseline with current analytics. Collect historical data so you know where you’re starting. Benchmarks make progress visible.
Identify weak points where users drop off or churn. Look for the biggest leaks in your customer journey. These are the opportunities where small changes deliver big impact.
Design small experiments to test improvements at those points. Test onboarding, paywalls, or tweak referral prompts. Focus on quick tests that reduce risk.
Review results monthly and adjust based on data. AARRR isn’t static. Regular reviews help you respond to changes in user behavior and market conditions.
Integrate paywall testing into activation, retention, and revenue stages. Paywalls are often the linchpin of subscription growth. Continuous testing ensures you improve conversions without harming retention.
Mastering the AARRR funnel isn’t about overhauling everything at once. It’s about making small, targeted improvements that compound over time.
The AARRR framework gives teams a clear way to measure growth, but applying it requires the right tools.
That’s where Purchasely comes in.
As an app experience platform, Purchasely helps mobile teams turn engagement into revenue by building high-performing paywalls, testing in-app journeys, and optimizing subscription flows.
Purchasely makes it easy to design, launch, and test new paywalls without relying on developer time.
Teams can try different layouts, pricing strategies, or messaging in minutes and see how each variation impacts free trial conversion, churn, and lifetime value.
Beyond paywalls, Purchasely gives teams the flexibility to test and refine the entire mobile journey.
From onboarding to upgrade prompts to renewal flows, every touchpoint can be improved to reduce friction and keep users engaged.
Purchasely’s integrated analytics make it simple to track the impact of every experiment on AARRR metrics.
Teams can monitor trial conversions, retention curves, and revenue performance as they happen, ensuring faster iteration and better decisions.
This visibility closes the loop between action and outcome, turning data into a daily growth driver.
The AARRR framework has stood the test of time because it keeps teams focused on what matters most: turning users into long-term customers.
In 2026, its relevance will be stronger than ever, especially for mobile apps where activation, retention, and revenue all depend on seamless user journeys.
Remember the essentials:
Define clear metrics for each stage of the AARRR funnel
Optimize paywalls to strengthen activation, retention, and revenue
Treat AARRR as an ongoing system, not a one-time setup
Ready to put the AARRR framework into action? Book a Purchasely demo and see how better paywalls can power sustainable growth across every stage of the mobile experience.