3 Easy Building Blocks to Master Product Analytics

Ace your next FAANG interview

Mandy Liu

Jan 13, 2025

∙ Paid

What we’ll cover today:

The AARRR growth funnel
How to conduct funnel analysis to improve your product
Key metrics you can’t ignore
Slice and dice your users with segmentation

Building block 1: The AARRR growth funnel

Ever heard of AARRR?

No, it’s not just a pirate sound—it’s a framework to map your product’s entire user journey, from their first click to the final revenue spark.

Here’s the play-by-play breakdown:

1. Acquisition: Bringing users to your door

How do people discover your product?

Metrics like website traffic, app downloads, or lead generation help measure your reach.

Example: That time you found an app because it was trending in the App Store or splashed across Instagram ads.

2. Activation: Turning visitors into believers

First impressions count. Activation is about creating a moment where users go, “Wow, I need this.”

Example: Do you have a dead app sitting in your phone but you never bother creating an account? You’re not activated.

3. Retention: Keeping users hooked

Retention tracks how often people come back.

Metrics like Daily Active Users (DAU), Monthly Active Users (MAU), and churn rate show whether you’re delighting or losing customers.

Example: Your favorite app that sends just the right notifications to pull you back in (looking at you, Spotify).

4. Referral: Letting users do your marketing

Nothing beats the power of word-of-mouth.

Think of how Clubhouse exploded in popularity with its invite-only model. Limited invites sparked FOMO, and suddenly everyone wanted in.

Example: I once begged a coworker to invite me—yep, it was that exclusive.

5. Revenue: Turning traction into treasure

The final boss stage: monetization.

Metrics like Average Revenue Per User (ARPU), Customer Lifetime Value (CLTV), and conversion rates measure how effectively you’re turning users into paying customers.

Let’s make this personal. Here’s how you found this article through the AARRR lens:

Acquisition: You spotted it on LinkedIn.
Activation: You loved it and hit “subscribe.”
Retention: You keep coming back for more articles.
Referral: You send this post to a friend, saying, “You need to read this!”
Revenue: You become a paid reader or join my coaching program.

How to conduct funnel analysis to improve your product

Funnel analysis helps you visualize the user journey and pinpoint exactly where things go south.

You’ll get this in interviews all the time.

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