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INTERVIEW QUESTION:

What is the AARM Framework and how is used by Business Analysts and Product Managers?

Posted by Chris Adams

Article Rating // 1494 Views // 0 Additional Answers & Comments

Categories: Business Analysis, Analytical and Problem Solving Skills, General

ANSWER

The AARM Framework can be used to evaluate a product idea, develop a strategy, guide the success of its launch, and understand how customers move through the different stages of a customer purchase funnel. The framework is generally applied to software, application, or service oriented products.

Acquisition: This stage covers everything from the inception of the product to the point the a user is acquired.  It leads product managers and business analysts to ask the following questions:
What problem is being solved for the customer?
What value is being delivered to the customer?
How will customers find and discover the product?
What marketing and promotional channels will be used to make customers away of the product and communicate its value? 
How does a customer acquire the product? 
What actions do they complete to be considered "acquired"? (Purchase? Registration? Free download?)

Depending on the product, customer acquisition metrics may be measured by the number or purchases, the number of lazy registrations (where minimal data is captured), or simply the number of downloads.

Activation: This stage is sometimes collapse into the previous stage and called Acquisition and Activation. It's an important part of the customer's journey so breaking it out separately can be prudent. Analyzing what it takes to get a user from the point of acquisition (a simple download or lazy registration with limited info) to becoming a more complete customer profile will help lead to greater monetization. But the product manager/business analyst has to understand the exchange of value necessary to help move the customer along that path.  What additional value does the customer gain by providing more information about themselves? 

Retention: Acquiring a customer isn't enough. Once they purchase, download, or subscribe it's important that the product delivers value so that the customer sticks around.  There are various ways to measure retention by focusing on points of engagement. 
Do customers return to the product or service?
What percentage of customers are returning customers and how frequently do they return? Daily actives? Weekly actives? Monthly actives?
Which features of the product or service are used most often?

Monetization: Our ultimate goal is monetization. 
How will the product or service be monetized? 
Which features will be monetized?
How many customers are paying for the product or a specific feature set?
Is it one time payment or subscription?
Why will they pay for it?
Will they pay directly or will someone else pay on their behalf (advertisers/affiliates)
What is the average revenue per user (ARPU)?
 
Another variation of this framework is AARRR (or Pirate Metrics). This version adds a Referral step and renames Monetization to Revenue.

Acquisition
Activation  
Retention
*Referral 
Revenue (Monetization)

Referral: This is often considered the next stage after retention, but some place this stage after Monetization.  It doesn't really make a big difference.  The referral stage is about maximizing growth through referrals, ratings and reviews, and social buzz.  This stage makes the entire process iterative (which is why some prefer to place it at the end after Monetization), as referrals lead to new acquisitions.

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Chris Adams
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Do your homework prior to the business analysis interview!

Having an idea of the type of questions you might be asked during a business analyst interview will not only give you confidence but it will also help you to formulate your thoughts and to be better prepared to answer the interview questions you might get during the interview for a business analyst position.  Of course, just memorizing a list of business analyst interview questions will not make you a great business analyst but it might just help you get that next job.





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