The Pirate Metrics Approach to the Membership Lifecycle

Peter Drucker is famous for saying, “you can’t manage what you don’t measure.” In other words, you can’t know if you’re successful unless success is clearly defined and tracked. This means that we need to define and use metrics for all of our business processes. 

Think Like a Startup

It is not hyperbole to say that we’ve just endured a massive global disruption. The COVID-19 pandemic forced changes throughout the economy. In our work with associations and non-profits, CEOs ask, ‘How do we adapt and thrive in this New Normal?’ The answer is to think like a startup

Thinking like a startup does not mean inventing everything from scratch. Instead, successful startups follow frameworks that define how value is created, where customers will engage, and what needs to be measured along the way. Our favorite approach for associations is to combine the Lean Canvas method for defining how value is created, and the Pirate Metrics framework for measuring engagement at various stages of the member lifecycle. 

What is a Lean Canvas? 

The classic approach to starting a new business venture typically involves preparing a written business plan. Traditionally, a business plan consists of developing a lengthy written narrative, assembling tons of economic analysis, and building a pitch to be delivered to decision-makers. The problem with this approach is that we become overly invested in our plan long before testing the solution in the marketplace. 

Lean Canvas is a planning method that helps you to get to the heart of your idea much more quickly. It puts everything on one page, allowing you to set out the critical information you need without unnecessary details. It focuses on problems to be solved, solutions, key metrics, and competitive advantages. Associations can use the Lean Canvas to evaluate the business case for new or existing products. 

What are key metrics? 

Metrics are results obtained through measurement. All businesses need to measure things: revenue, expenses, profitability, and cash flows are just a few critical financial measures. Associations measure membership, event registrations, publication sales, and certifications, among other key indicators of engagement. 

What are Pirate Metrics? 

Pirate metrics are a customer-lifecycle framework invented by Dave McClure from 500 Startups that you can use to determine where you should focus on optimizing engagement with your prospects, customers, and members. 

Pirate metrics provide a method of grouping metrics together based on six stages of engagement: Awareness, Acquisition, Activation, Revenue, Retention, Referral — or AAARRR for short (like a pirate. Pirate metrics, get it?) 

What are Dashboards? 

Dashboards help us present key metrics in meaningful ways. The dashboard metaphor is familiar because most of us have driven an automobile and use the dashboard to monitor critical systems. For example, how fast am I going? How much fuel do I have left? Is my battery fully charged? 

Associations need dashboards to make informed decisions that will drive engagement. Their dashboards need to be timely, relevant, and accurate. Using a lifecycle approach such as Pirate Metrics to group your metrics into specific areas of engagement can offer insights into how your members engage with your association.   

The secret to working with lifecycle metrics is to view them as a virtuous cycle reinforced through a feedback loop. For example, in measuring member engagement an individual could be evaluating a particular product or service in the awareness phase while simultaneously referring someone to a product or service provided by your association. It’s important to look at engagement holistically. 

How to Apply Pirate Metrics to Your Association Dashboard 

Let’s look at some specific examples of how to organize your engagement dashboard according to Pirate Metrics: 

Awareness: how do you first identify potential members? Awareness metrics fall into the earliest stages of the customer lifecycle. In the digital age, we need to know where and how we are engaging, how much we are spending on each channel, and how often we are converting awareness into customer acquisition. Website visitor statistics, blog post interactions, social media likes, and mentions are all examples of Awareness metrics. 

Acquisition: what is their onboarding experience? The member journey starts with onboarding. How many steps does it take to get access to a recent purchase?  How many customers are successfully navigating the onboarding process? Is there an abandon rate that needs to be measured during this process? Member acquisitions occur when individuals successfully sign up and complete your onboarding process. 

Activation: what is their first value experience? What is the learning curve and lead time to obtaining value from their purchase? An example of this metric might be the delay between a subscriber signing up for a course and actually engaging with the course materials. A delay in engagement could signal an issue, particularly if the delay is widespread among course participants. Is the customer affirming that value was received from the course or event? Are you measuring the net promoter score at the product level? 

Retention: what drives repeat engagement? Membership organizations rely heavily on retention, generally in the form of membership renewals. Members renew when the value received is considered a fair exchange for the price they have paid. Churn is one metric related to retention, and is the annual percentage rate at which customers stop subscribing to a service. Tenure analysis is another retention metric. The purpose of a tenure analysis is to identify characteristics that are correlated with longer tenures. Tenure analysis is usually paired with a monthly recurring revenue analysis to evaluate which customer segments will have higher average lifetime values. 

Referral: what is the referral engine? Nothing is more powerful than a recommendation from a friend or colleague. Is this customer a Net Promoter? Does your e-commerce engine allow upvoting or provide a recommendation engine? Can you capture these referral metrics from your social media channels? 

Revenue: what is the income model? A CEO friend of ours is fond of saying ‘no margin … no mission’. Being a non-profit is a tax status, not a business model. Engaged customers will happily pay for value received. Revenue metrics such as MRR (monthly recurring revenue), publication sales, event registrations, and certifications are examples of revenue metrics. 

Life Beyond Dashboards 

Dashboards are an excellent way to present and analyze historical data. We can analyze trends, develop operational plans, and measure engagement much more efficiently by using dashboards organized according to Pirate Metrics.  

However, there are some limitations. Most dashboards present historical data (some with trend analysis). While looking at patterns from the past can be powerful, this is like driving your car down the highway using only the rear-view mirror. 

Powerful and inexpensive computing platforms now make it possible to employ data science techniques to predict where and how your prospects, customers, and members will engage in the future. Our friends at Tasio published an excellent blog on using predictive analytics in associations. We’ll cover Predictive Analytics more in an upcoming article, but first let’s set you up for success with some tips on data governance. 

Make the Most of Data in Your Association with Data Governance 

Setting your organization up for success with dashboards and predictive analytics requires some careful planning. You can start now by tuning up your data governance program. Low-quality data will yield low-quality information. ‘Garbage in … Garbage Out’ is an old saying for technologists, and that has never been more true as the amount of data we collect, store and analyze has exploded exponentially. 

You can get a lot of great information on this topic from Rene’s recent blog posts on data governance and data quality

Wrapping IT Up 

Successful startups measure everything. Acting like a startup means embracing a data-driven culture powered by analytics. We tell our clients that ‘data is fungible’. In other words, data is the hard asset produced by our business processes.  

Developing competencies in your organization around metrics, analytics, and prediction tools will help you leverage this asset as you engage your prospects, customers, and members. 

Interested in applying these principles in your own organization? Learn more about our Analytics Capability Assessment.

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