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Computers aren’t just for the front pocket of my shirt anymore. Fantasy stories like Game of Thrones are all the rage. Kids two-strap their backpacks to protect their posture later in life. Maybe you’ve witnessed (and appreciated) these changes yourself.

As being interested and involved in life became a social value, aka “cool” – I’ve simply become what’s known as well-informed. Part of this is reading three books a day. Ok, let me clarify: I am not a wizard. I read from three books a day. Philosophy starts my mornings off with big ideas, non-fiction at mid-day guides my self improvement, and it’s fiction at night for relaxation.

And I’m never without my dictionary. Because with all that reading, I need to keep up with my learning. OK – that sounded nerdy. But it’s true: how can you stay up on important ideas without understanding the terms that surround a topic?

That said, today I’m bringing you 12 key growth automation terms you need to know to start growing customer lifetime value this year. If you’re thinking of growth marketing and growth hacking, we’re on the same page. Once we’ve talked about what growth means we’ll talk Pirate Metrics and the “AARRR” growth marketing framework.

Pirate Metrics is a growth marketing framework coined by Dave McClure to scale company growth. It focuses on optimizing the marketing funnel by looking at five key phases of the customer journey – Acquisition, Activation, Retention, Revenue, and Referral – or AARRR for short.

Let’s go!

Growth Automation

Growth automation is any campaign that full funnel marketers use to increase customer lifetime value.

Growth automation focuses on improving key customer metrics in the AARRR funnel. Because without these campaigns, growth is a fleeting thing – like water from a “leaky bucket.” 

By paying attention to the entire customer lifecycle and optimizing for customer experience, growth marketers use initiatives that engage their best customers with campaigns that can give out targeted offers, encourage customer loyalty, and measure satisfaction.

An example of this would be Dropbox’s refer-a-friend campaign. Hailed as an ingenious growth hack, the company saw a massive uptick in users and engagement by employing this BOFU campaign. Getting engaged users to refer their friends effectively looped in new users while increasing user loyalty.

Growth automation teams need software platforms to run these highly segmented campaigns. Relying on a mix of offer segmentation, event-based email triggers and refer a friend marketing to increase revenue per customer. Growth marketers rely upon creative initiatives, data analysis, and an ever-widening personal knowledge base to effectively engage customers.

Acquisition

Whether it’s social traffic via content marketing or a landing page visit via AdWords, your campaign goals are to generate new qualified visitors and leads. Testing new audience targeting techniques, different ad creative combinations and producing various types of content.

Customer acquisition can show you how your marketing channels are performing. Marketers should look at web traffic, social followers, email subscribers, content downloads, and first purchases to measure performance.

Activation

The activation stage means people have taken their first action with your product or service. IE visited your website, downloaded your app, or made their first purchase.

Just because they’ve signed up for a free trial or downloaded your app doesn’t mean they’re active. This is the point when the user is testing you out, seeing if your product or service is useful.

Onboarding and user-experience are key focal points here, as early success leaves a lasting impression and can influence later purchases. Look at metrics like repeat visitors, re-targeting CTRs, email opens/clicks, and trial activation rates.

Retention

Retention is the amount of incremental revenue you can generate from a customer.

Here’s where Pirate Metrics and growth automation really take off. Once people have started using your product or service, you really want them to keep it up. Why? Because your product rules – obviously –  but when users stick around your bottom line increases.

Now you can think of cross-sells and upsells, using lifecycle emails to retarget and re-engage your best users. Your brand shouldn’t disappear after a customer converts, the relationship and messaging should simply change. Provide more and different content to keep users active with your company by adding value to their customer experience, and encouraging repeat purchases.

Revenue

We all know this stage because it’s payday!

But, within the Pirate Metrics structure, you’re only halfway home and far from done. It’s clear that users grasp the value of your product or service, now is the time to ensure that feeling stays intact. It costs much less to sell to current customers, and is progressively more lucrative (up to 10x!), so be sure this stage is worth returning to for customers.

After you’ve collected the first payment, made the first sale, signed the contract – now you can capitalize on your customer data to inform how to grow your relationship through the coming stages. This means revisiting your checkout process, pricing plans, and subscriber cancellation campaigns. 

Referral

When a customer recommends your product or service to a friend, that’s a referral.

The referral customer stage can be used to extend customer lifetime value and bring in new paying customers. Once customers have reached this phase, they’re loyal to your brand and want to share it with their friends. Metrics to track are referral visitors, invite rates, referred user signup rates and referred user conversion rates.

It’s important to facilitate this process with optimized referral campaigns that have compelling rewards, mobile optimized sharing and a streamlined conversion flow. Why? According to Texas Tech University, 83% of customers are willing to refer friends, yet only 29% actually do. Your job is to nudge these customers throughout the referral funnel to become strong advocates for your brand.

Double-Sided Rewards

Double-sided rewards are referral incentives that are given out to both the referring customer and the referred friend. Why is this important? Because humans are social creatures who are receptive to campaigns focused on fairness and group stability.

Double-sided rewards help both parties stay on equal terms. This is the goodwill that promotes future referrals. Just as social proof dictates that we look to others for recommendations, so does our fundamental sense of altruism to others in our group ensuring that we’ll reach out to share a good deal.

Customer Loyalty

Customer loyalty is devotion to brand based upon previous experiences. This encompasses emotional experiences, value-driven attributes of the product or service and overall perceived value of the product and service.

Customer advocacy is part of customer loyalty as these actions like social sharing, referring friends and leaving product reviews are signs of true brand loyalty. They’ve likely experienced your brand in more ways than one, perhaps buying multiple items, dealing with customer service, and referring their friends.

Stickiness

Stickiness is your brands ability to retain customers.

The term sticky is applied to tech products, but think of it as anything that makes users want to hang around. For example, your website is sticky when users visit repeatedly, login, or make purchases. A fast loading site that’s easy to navigate, showcases great content and valuable products will keep users coming back to your brand.

Take Starbucks for example. Aside from being a brick and mortar chain, the coffee giant developed an app to expand the customer experience, effectively making buying and sharing Starbucks coffee and culture easier.

You can pay for a latte from your phone, hear songs, leave a tip, and redeem loyalty program rewards – all in the palm of your hand. This feature-rich customer experience is reason enough to stick with Starbucks, caffeine buzz aside.

Awareness

If you’re a CPG brand like Coca Cola, the most recognized brand on earth, you’re doing it right. Why? Because you have a mature relationship with billions, an instantaneous communication of value on looks alone. It may have taken years of TV, billboards, and an ever-evolving Instagram campaign aimed at millennials to accomplish it, but it’s worth it.

But remember that recognition for recognition’s sake is not the goal. To align with Pirate Metrics and growth automation, your mission is to drive awareness to people who will be engaged and qualified customers. Do this by mapping awareness campaigns to objectives further down the funnel.

In Coke’s case, you’re looking to differentiate from Pepsi and turn the tide of loyalty in your favor so users will introduce your product to friends later. You can look to impressions, CTRs, social shares and site visits as metrics of awareness.

Churn Rate

Your churn rate is the amount of customers or subscribers who choose to stop using your product or service. According to a 2016 report from InsightSquared, the average SaaS company’s customer lifetime is 48 months, monthly recurring revenue is $445,000, and the annual revenue churn is 3%.

If you’re an average SaaS company, your revenue churn is $160,200 by years end. But as Pacific Surveys reports, 62% of 1,500 surveyed SaaS companies have an annual revenue churn rate above 5%. 

Behavioral Triggers

Triggers are cues or reminders that prompt users to take a specific action.

When we’re trying to move users through the customer lifecycle stages of acquisition, activation, retention, revenue and referral, it becomes important to use consumer psychology to influence these desired behaviors. Three factors are required when prompting a trigger:

  • Motivation: You must demonstrate value (offer referral incentive)
  • Ability: Make the behaviors simple to complete (facilitate one-click share)
  • Trigger: Cue the action (CTA)

To optimize full funnel marketing, engaging users to complete desired actions is key. You want users to build a habit using your product. If your customer experience is rewarding, users will look forward to engagements via the triggers you use.

Over and Out

You made it! You’re ready to tackle full funnel marketing in it’s entirety. I’ve thrown the book at these 12 growth automation terms, making sure that you’re prepared to utilize Pirate Metrics and other key growth frameworks to optimize your customer lifecycle.

It all comes down to customer experience, so find areas where you can improve the quality, ease, and enjoyment of using your product or service. Users who receive exceptional service know it, and are willing to refer their friends by the time they reach the bottom of the funnel. Your job is simply to make that journey as pleasant as possible.

Brandon GainsBrandon Gains is the VP of Marketing at Referral SaaSquatch. He leads growth initiatives at the company using a mix of content, design and web development tactics. Brandon also contributes articles to publications like SocialMediaToday, CustomerThink and Business2Community. You can connect with him via email brandon at referralsaasquatch.com or on LinkedIn