Are KPIs killing you — AARM Framework
Defining KPIs sound easy but are we doing it the right way? I am sure every time we sit down to decide the metric and the north star, one question that definitely must be coming to our mind is, which lever is the particular KPI going to impact. Am I right?
In this article we will try to look AARM Framework that will help us to bucket our KPIs and try to see that in action with one of the real use case.
What is AARM framework?
AARM stands for Acquisition, Activation, Retention, and Monetisation. These are four growth levers and all the KPIs need to lie in these 4 buckets. Another important point to note that it is never “one size fits all” even if the products are in same category. For example, though Uber and BLU Smart are in same category of providing cab services, their KPIs will be different because they are in different stages of growth. We will not go in much detail of that as it is different game all together but you can refer this image to get the idea.
Before getting into actual use case let us understand the four levers that are mentioned above:
- Acquisition
As the name suggests this is the stage where each and every step from the foundation of the product to the user acquisition is considered. As a product manager you should think out loud on
a. Why we are developing this product
b. What is the need
c. What is the persona and the target audience
d. How much money is going to be spent from developing the product to acquiring the users (including marketing cost),
e. And the last how much money company is going to make
Now according to the product, KPIs could be:
a. Number of downloads
b. Lazy Registrations, etc.
2. Activation
This stage is also called onboarding, and as the name suggests, here you as a Product Manager put more efforts on taking the customer forward in the journey once the app download/registration has been done. There is a popular example where this step is done beautifully.
Various KPIs that can be tracked are:
a. Average number of steps completed by a user
b. Average time taken on each step, etc.
3. Retention
Acquiring and onboarding customer is not enough, what we should understand is app providing the values for which user came on the app. This should be measured along with the engagement on the app.
Various KPIs that needs to be in this bucket can be:
a. Number of daily/weekly/monthly/yearly active users
b. Average Session time on each feature
c. Number of users dropping on each step of the funnel from top to bottom
d. Most used features on the app, etc.
4. Monetisation
This is critical lever as main aim of the product/business is to make money. Points that should come in our mind:
a. Will the customers be willing to pay for this product
b. Which features have the potential to generate the revenue
c. Should there be subscription model or advertisements, and will the users accept that
and the various KPIs that could be in this bucket
a. Average Revenue Per User (ARPU)
b. Return on Investment (ROI), etc.
Uber Vs BLU Smart
Time to see the KPIs in action for two prominent players in shared mobility space. One we all know, which is Uber and has become part of daily routine or bread and butter for office going. On the other hand a new player has entered into the market taking the advantage of growing EV space and making the best use of it, which is BLU Smart.
Though both the companies have USPs and some common propositions, still what do you think are they tracking metrics to align with USPs? Maybe yes, maybe no.
Moving on, as we have seen above, we have companies into different categories:
- Uber: It is in maturity stage, so the focus is towards making money, and the foundation that is contributing towards making money. Let us see the top 6 KPIs that Uber must be tracking are:
a. TPV generated daily/weekly/monthly/quarterly/semi-annually/annually
b. # rides booked on a same calendar level
c. Average Kms covered
d. # cancellations
e. Active accounts MoM/YoY
f. Growth Trends + or — for the above KPIs
2. BLU Smart: It is in growth stage, so the focus is towards acquiring new customers, engage, and retain them. Top 6 KPIs that BLU Smart must be tracking are:
a. # app downloads (both customer and driver)
b. # Successful registrations on the app (both customer and driver)
c. # completed rides
d. Average App Rating (both customer and driver) and rides feedback
e. Average Discount from Promotions on Rides
f. Growth Trends + or — for the above KPIs
That is all for this article. Hope you have got some good insights. Fee free to mention your thoughts in comments and if you liked the article do give some claps :)
Thank You