The AARRR Framework: Which Step Should You Really Start With?

If you’re looking for an article on the AARRR framework, you’ve probably already come across a dozen versions of the same text: the famous pirate’s cry, the five letters defined one after the other, the three usual examples (Dropbox, Facebook, Airbnb), and a list of analytics tools to install. You close the page knowing what AARRR stands for but still not knowing what to do with it on Monday morning.

At Salesdorado, we have a pretty strong opinion about this famous AARRR framework. The problem, to be honest, lies in the acronym itself. Because we’re constantly reading it in that order, we end up believing that we have to work through these five stages in that order, starting with Acquisition. That’s the most costly mistake you can make with this model, especially when selling in the B2B space.

What you’ll learn in this article:

• Which stage of the AARRR framework should you start with, based on your growth model?
• The practical application of each letter in a B2B context (since AARRR was originally designed for consumer-facing applications).
• Real-world figures from companies that have actually implemented it.

AARRR: The Basics You Need to Know Before Debunking the Myth

The AARRR framework was introduced in 2007 by Dave McClure, an investor and founder of the 500 Startups accelerator, in a presentation that has become famous under the name “Startup Metrics for Pirates.” The name comes from the way the acronym sounds, which is similar to the cry of a cartoon pirate. That’s the story—and that’s all there is to it.

The underlying idea is much more interesting. Back then, founders were drowning in dashboards filled with “vanity metrics”—visitor and follower counts—that were flattering but said nothing about a company’s true health.

McClure suggested boiling it all down to five questions that really matter.

• Lead Generation: Where Do Your Leads Come From?
• Activation: Are they having a successful first experience?
• Retention: Do they come back, and how often?
• Recommendation: Do they talk about you to others?
• Revenue: How much do they bring in, and at what cost?

The best way to visualize this model is to think of a bucket with a hole in it. Your prospects enter at the top through acquisition. At each stage, some of them fall through the cracks. No funnel converts at 100%—that’s normal. The whole point of AARRR is to identify where your biggest leaks are.

The Acronym Trap: Why No One Should Start with Acquisition

Here’s the point that most guides fail to mention.

The order of the letters describes your client’s journey. It does not describe the order in which you should work on your projects. .

The difference may seem subtle, but it actually changes everything. Imagine for a moment that your retention rate is poor: your customers sign up, then churn after three months. If your instinct is to invest more in customer acquisition to make up for it, you’re just filling a leaky bucket faster. You acquire 100 customers, 60 of them leave within the quarter, and your customer acquisition cost becomes impossible to recoup.

The numbers speak for themselves on this point. Acquiring a new customer costs several times more than retaining an existing one. According to research by Frederick Reichheld at Bain, as reported in the Harvard Business Review, a 5% increase in the retention rate can boost profits by 25 to 95 percent.

The moral of the story: No customer acquisition strategy can make up for poor retention.

So the right way to use AARRR isn’t to go through the five stages in sequence, but rather to identify the problem: which stage is holding everything else back? Just one underperforming stage is enough to cause the entire funnel’s performance to plummet. That’s where (and nowhere else) you should focus your efforts.

RARRA, the version that puts retention back at the forefront

This observation gave rise to a variation: RARRA. The same steps, but in a different order of priority: Retention, Activation, Referral, Revenue, Acquisition. The model was popularized around 2017 by growth experts Thomas Petit and Gabor Papp, in response to a market where acquisition channels are saturated and the cost per lead is constantly rising.

The logic behind RARRA can be summed up in one sentence: most SaaS companies don’t fail because of a lack of customers, but because of their inability to retain them. Since retention costs far less than acquisition, you might as well make retention your guiding principle and build everything else around it.

So, which letter should I start with?

There is no single answer, and that is precisely why it is so valuable to use the framework as a diagnostic tool rather than as a set of instructions.

Here’s how to decide based on your situation:

• Haven’t found your product-market fit yet? Start withActivation. Identify what makes your users want to stay, then build your user acquisition strategy around that signal.
• Is your retention rate low—below about 85% gross retention? Fix it before you spend another euro on customer acquisition.
• Is your retention rate strong—at 90% or higher? If so, you can really ramp up customer acquisition: your customer lifetime value-to-acquisition-cost ratio will handle the load.
• Is your growth driven by the product or by marketing? The RARRA framework will resonate more with you, since it’s usage and recommendations that keep the machine running.
• Is your growth driven by a sales-led team? Stick with the AARRR framework, but think of retention as revenue growth from your existing accounts.

Acquisition: When a Single Channel Is No Longer Enough

In 2007, the entire market fit into a single box because there was only one entry point. Most B2B companies found their customers through Google, either via organic search results or paid advertising. The rest remained a niche market.

Those days are gone. Today, the acquisition process involves at least three distinct stages:

• A standard Google search.
• Paid advertising.
• A third factor that didn’t exist fifteen years ago:the visibility of generative AI responses (ChatGPT, Perplexity, results generated by Google).

Measuring “acquisition” as a single unit no longer makes sense. We need to track the cost and quality of the traffic generated on a channel-by-channel basis.

In B2B, quality far outweighs volume. Low-cost traffic that never converts is actually the most expensive of all. This is where calculating the cost of acquisition by channel becomes crucial, as does a good lead-scoring model to prioritize prospects who truly resemble your best customers.

Key indicators to monitor closely:

• Customer Acquisition Cost (CAC).
• The conversion rate by channel.
• The volume of MQL and SQL.
• The proportion of each source in the generated pipeline.

Activation: The Key to Success, Especially in B2B

Activation is the moment when a user first recognizes the value of your product—the famous “aha moment.” The real challenge lies in identifying the specific action that separates those who will stay from those who will leave.

The most telling example is still Slack. The company analyzed the behavior of its client teams and identified a strikingly clear threshold: 2,000 messages exchanged.

Any team that has exchanged 2,000 messages has really put Slack to the test. And 93% of them are still using it today. (Stewart Butterfield, founder of Slack)

For a team of about 50 people, 2,000 messages represent about 10 hours of use. Below this threshold, user retention is unpredictable. Above it, retention skyrockets. In fact, Slack has long offered the first 2,000 messages for free, precisely to help each team reach this tipping point.

In terms of key metrics, an activation rate of 30 to 40% is considered healthy for B2B SaaS. If it’s below 20%, your onboarding process is too long or too complex. Above 60%, be wary: your “aha moment” is likely set too low and no longer tells you much.

Two specific aspects of B2B deserve attention:

• First, activation is often measured at the team level rather than the individual level: an account is considered activated when at least three users are active within the first seven days.
• Second, when the product is complex, activation isn’t always a self-service process. Superhuman, the premium email client, walks every new user through a personalized onboarding call and conducts dozens of them every day. It’s a high cost—one they’re willing to bear—because that’s what turns a one-time trial into a habit.

To guide your users toward that tipping point, you need to combine two strategies: a well-designed customer onboarding process and lead nurturing sequences that re-engage those who drop off along the way.

Retention: The Step That Makes All the Difference

If you had to focus on just one step in B2B, this would be it. The reason is simple: your revenue is recurring. Even the slightest churn, at any level, erodes your compound growth. .

Retention is best measured using cohort retention curves. This is currently the most reliable way to assess your product-market fit: Do customers acquired in a given month stick around, or does the curve drop off as the weeks go by?

To take action before it’s too late, you need to learn to spot the early warning signs. A customer who logs in less and less often—or whose sessions are getting shorter week after week—is a customer who is slipping through your fingers. The churn rate remains the key metric, supplemented by an NPS to gauge customer sentiment.

It’s also important to distinguish between voluntary churn (when a customer decides to leave) and involuntary churn (when a customer leaves due to a failed payment or an expired card). The latter can be addressed with automatic payment reminders and sometimes accounts for a surprisingly large portion of your losses.

Netflix is a prime example of the power of retention when treated as a product in its own right: its recommendation engine exists first and foremost to give you a reason to come back tomorrow. And when a customer has left you despite your best efforts, all is not lost. A good customer win-back strategy can help you win back some of them.

Recommendation: The “viral loop” doesn’t really exist in B2B

In B2C, recommendations take the form of a viral loop: Dropbox offered free storage for each referral, and its user base skyrocketed. Simple and incredibly effective.

In B2B, it doesn’t work that way. Your customers aren’t going to spam their professional network just to get two gigabytes of storage.

The recommendation takes on other forms:

• Client Testimonials.
• Case Studies.
• Partnerships.
• Structured sponsorship programs.
• Etc.

The key point is the value of the exchange. A “2 months free” or “50 euros off” is never enough to convince someone to put their reputation on the line. You get referrals when the incentive is substantial—for example, access to your premium plan at the entry-level price for every customer referred. But let’s be honest: not all products have a natural referral dynamic. In that case, it’s better to admit it than to force a system that will never catch on.

Revenue: Expansion Weighs Heavier Than Acquisitions

One last point…and by no means the least. In B2B, the bulk of long-term revenue doesn’t come from new customers, but from growing business with existing customers.

The AARRR framework provides a powerful financial diagnostic tool here. If your lifetime value (LTV) is low, the problem lies either in your monetization—when the average revenue per account is too low—or in your retention—when churn ends the relationship too soon. In the first case, you should focus on upselling and cross-selling. In the second, you need to step up your retention efforts.

The metric that sums it all up is net revenue retention (NRR). If it’s above 100%, your existing customers are spending more year over year, even without new customer acquisitions. This is a sign of a healthy business. To manage all of this, rely on clear sales performance metrics rather than an overloaded dashboard.

The Limitations of AARRR That Are Too Often Overlooked

No framework is perfect, and the AARRR framework has some blind spots that you should be aware of before relying on it entirely:

• It assumes a linear, sequential path. However, in real life, your users skip steps or complete several at once.
• It was designed for self-service tech products. However, in a B2B context with a purchasing committee, the user is not the buyer, and the purchasing process is by no means linear.
• It focuses on quantitative data. It fails to capture the brand, perceived satisfaction, or the customer experience—all of which play a major role in B2B purchasing decisions.
• It assumes a recommendation mechanism that simply does not exist in all models.

The most effective approach is to combine AARRR with a growth loop or flywheel model. While the funnel identifies where users are dropping out, the loop aims to create a self-sustaining mechanism where each new user generates more. The best teams don’t choose between the two; they use the funnel to pinpoint churn and the loop to build an acquisition strategy that grows over time.

What tools can you use to track your AARRR metrics?

Theory is worthless without measurement. And to do that, we need to use two types of tools:

• For activation and retention, you need an event analytics tool capable of tracking behavior by cohort. The industry leaders are Amplitude and Mixpanel, with Google Analytics 4 as a good starting point. If you’re looking to set up your analytics without using Google’s solution, check out our comparison of alternatives to Google Analytics.
• For B2B, your CRM remains the backbone of your operations. It centralizes the sales pipeline, customer acquisition costs by source, and growth tracking. It’s also where you measure the effectiveness of your sales funnel from start to finish.

Our Take on the AARRR Framework

AARRR is an excellent diagnostic tool but a poor set of instructions. Keep this distinction in mind—it’s the only one that really matters. The acronym describes your customer’s journey, not your order of priorities.

Don’t go through the five letters one by one. Instead, identify the step that’s holding everything else back, and focus your efforts there. For the vast majority of B2B companies, this stage has a name: retention. That’s where the most profitable growth lies, and it’s often the last thing people look at.