5 powerful levers for growing your product as a solopreneur
Focus on these levers to plan, measure, and accelerate your product's growth
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In this newsletter, I'll cover 5 essential levers for growing your product as a solopreneur: acquisition, activation, retention, referral, and revenue (also known as "AARRR").
While there are many ways to measure and grow a product, the AARRR framework offers an intuitive, funnel-alike view of your users’ journey.
This framework is helpful for anyone building online products, but it's particularly relevant to indie hackers and solopreneurs because it provides a simple and structured approach to product growth.
By thinking about, measuring, and improving these 5 levers, you'll be on track to grow your product in no time.
Let's dive in!
Acquisition
Acquisition is the critical first step of attracting potential customers to visit your site. This is the foundation of all growth, since without people visiting your site, you can't drive any usage, let alone growth.
You’re likely to get your first dozen users manually by talking to them, but it’s necessary for you to have a long-term strategy for getting more users at scale.
For indie projects, you'll usually focus on free acquisition strategies like social media marketing, content marketing, and search engine optimization (SEO).
If each customer generates a significant amount of revenue (high lifetime value), you can consider paid acquisition such as advertising in search engines (SEM), social media (SMM), and newsletters. Some products are more expensive than others, so they would require low-touch or high-touch sales process to get customers in the door.
When creating a hypothesis for a new product, it's helpful to think about one or two channels that would drive most of its growth. Don’t choose too many!
Note that some acquisition channels, like Product Hunt or going the press, can help launch your product and drive some traffic for a few days, but they aren’t valid as long-term acquisition channels.
Measuring acquisition is straightforward - focus on the number of daily/weekly/monthly visitors to your site. Tools like Google Analytics can help you break down the traffic you get by channel.
Improving your acquisition is about driving more users, and more relevant users to your site, and is largely dependent on the channel you use. You’d usually want to increase the volume of users you get, while keeping user relevancy/intent high, and the user acquisition costs low.
Activation
Activation focuses on getting visitors and users to take action that would help them get value from your product, and understand how it helps them (the Aha moment). Without it, visitors are unlikely to see the value of your product and return to it.
Start with forming a sensible hypothesis of the few steps a user needs to take to realize the value of your product. Then, design the new user onboarding flow to drive users to take one action at a time (a single, noticable call-to-action). For example: Sign up → Personalize your feed → Watch a video on the feed.
You measure activation by tracking the percentage of users who take a particular action, like signing up or personalizing their feed. You can use event-driven analytics platforms like PostHog or MixPanel to measure that.
Increasing activation is done by improving your onboarding process. Ensure it's simple, intuitive, and leads users quickly to take the necessary actions to realize the value of your product. Live usability tests and session replay tools would help you understand how new users interact with your app and where they get confused or hesitant, so you can improve the onboarding flow and the activation rate.
Retention
Retention is about ensuring users return to your product and keep using it. Without proper retention, you have a leaky bucket, and you will lose all your new users in a matter of weeks or months.
When developing indie products, it's important to consider how long would users use your product for:
With products like Notion and Canva, the ideal customer would continue and use the product every week for years, which means they are more inclined to pay a monthly/annual subscription, and increasing retention would be a core metric for the business.
With products like Downloadable Guides or Resume Review Tools, even the ideal user is likely to get most of the value immediately, and they have no reason to return, so retention is tricky and it’s often better to charge a one-time upfront fee.
Retention is usually measured by the percentage of users returning to your app and using it again after their first visit. It may be useful to measure day-1 retention (the % of users returning the following day after their first visit), day-7 retention (the % of users returning after a week), and day-30 retention.
Some analytics tools can show you retention in cohorts, so you can see how product and marketing changes you’ve made affected the retention:
Improving retention requires talking to your users and iterating on feedback to make your product indispensable and hone in on your ideal customers. Some consider strong retention to be one of the key indicators of product-market fit.
Other than improving your product and targeting more relevant users, there are also tactical ways to improve retention, such as sending daily digest emails or notifications and creating time-based features. See the book Hooked by Nir Eyal to learn about creating hooks that drive users to return to your product.
Referral
Referral involves getting users to share your product and invite others to use it. It is hard to accomplish, but it's especially valuable for indie hackers since it provides free, organic growth.
Consider your product’s referral potential:
Some products, such as single-player SaaS tools, don't have a high referral potential, but they can still be shared through word-of-mouth by happy users.
Other products are naturally sharable since users derive more value by inviting others to use the product - think Facebook, Dropbox, or Slack.
Whether you’re in the first or second group, you can consider integrating social or collaborative features within your product, creating shareable content (profiles, awards, badges, embed widgets, contests, and campaigns), or offering incentives to refer others (affiliate program or discounts).
While word-of-mouth is hard to measure, referrals where one user invites others directly through your product can be measure by generating unique links for each referral, such as mysite.com/invite?ref=472873.
Revenue
Revenue is the ultimate aim, turning your product's value into a viable business.
You may directly monetize your users by charging them a one-time pyament, monthly/annual subscription fee, usage-based payment, or commissions.
You may also indirectly monetize your users by placing ads, sponsored content, or affiliate links in your product.
Look for a business model that fits your product's usage pattern, when value is provided, and your target audience's ability and willingness to pay.
Revenue can easily be measured monthly or annually with most payment providers like Stripe. If you have a subscription model, you'll usually want to measure monthly/annual recurring revenue (MRR/ARR). It’s also important to measure your conversion rate, namely, what’s the percentage of your users who become paying users.
To increase revenue, start by analyzing your current sales data and talking to your best customers to understand what drives purchase decisions. See if you can increase the percentage of new users who end up paying, either through a trial period, no-trial approach, or a free plan. Experiment with different pricing tiers and promotions to discover what maximizes revenue, always relying on feedback from customers and data to inform your decisions.
Take the first step
Using the AARRR framework will help you plan, measure, and accelerate your growth in a structured way.
Start by writing down a hypothesis of the right strategies to drive acquisition, activation, retention, referral, and revenue for your product. You can then choose the metrics you want to track for each area and set up analytics tracking. Once this is in place, you can start experimenting with product and marketing changes to improve each one of these levers.
I hope this framework helps you grow your product and see it fulfilling its full potential.
Until next time,
Lior
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