Last updated 13 June 2026 · 6 min read
The Pirate Funnel for a Business That Isn't a Startup
TL;DR
AARRR is five stages every business already has, whether you sell software, sandwiches, or plumbing. The value is not the acronym. It is writing down what each stage means for your business, in your words, so you can see where you actually leak. Five stages, three examples each.
Five stages you already have
Dave McClure named it in 2007. Acquisition, Activation, Retention, Referral, Revenue. AARRR. The pirate funnel.
It reads like startup jargon. It isn't.
Every business moves a stranger to a paying regular through the same five steps. A cafe does it. A sparky does it. A software product does it.
The trick is saying what each step means for your business, not the textbook's.
Acquisition: a stranger notices you
Software: someone lands on the site from a search or an ad.
Shop: someone walks past, or finds you on Instagram.
Service: someone gets your name from a mate or a job board.
The question: where do strangers first hear about you, and how many?
Activation: the first good experience
Software: they sign up and hit the moment the product finally clicks.
Shop: they buy the first thing, and it is good.
Service: the first job goes well and on time.
The question: of the people who notice you, how many have one genuinely good first experience?
Retention: they come back
Software: they log in again next week.
Shop: they reorder.
Service: they call you for the next job instead of someone else.
The question: how many come back, and how fast do the rest go quiet?
Referral: they bring someone
Software: they invite a teammate.
Shop: they tag a friend.
Service: they pass your number on.
The question: how many new customers arrive because an old one sent them?
Revenue: it adds up
Software: monthly recurring revenue.
Shop: repeat order value.
Service: jobs booked this month.
The question: what is a customer actually worth once you count the repeats?
Write your own definitions
The funnel is useless until the stages are defined in your words, with your numbers.
Activation for a jerky brand is not activation for a billing tool. Don't borrow the definition. Write it.
Once each stage has a number, the leak is obvious. You stop guessing which end of the funnel to fix and start on the one that's actually bleeding.
The funnel is the scoreboard for everything else
The funnel only earns its keep if it reads from the same place your other growth functions live.
Acquisition is what your outreach and content did. Retention and revenue are what happened after.
A funnel in a separate analytics tab is a number you glance at. A funnel sitting next to the work is a number you act on, because you can see which lever moved it.
That's the case for centralising your growth functions: the scoreboard and the game are in one place, so the score actually changes how you play the next move.
Questions
- Isn't this only for venture-backed startups?
- No. The acronym came from startups, the shape is universal. A corner shop has acquisition and retention whether or not anyone in the shop calls it that.
- Where do I start if I have no data?
- Start with the stage you feel weakest, and write down the one number that describes it today. A rough number you will improve beats a perfect dashboard you never build.
Sources
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