The real secret to understanding your customers is to understand your average revenue per user (ARPU). ARPU allows you to identify trends, implement changes, and shift your company's course toward a larger SaaS profit pool than we could ever have dreamed of. Start quantifying your customer personas, and this will feed into your SAAS metrics over time and the business will grow.
While in SaaS key indicators such as monthly recurring revenue (MRR) are the most in the spotlight, average revenue per user (ARPU) is critical to keep your business in good shape. A deeper look at how much an average user spends can give you insight into how to optimize your support budget, prices and product positioning.
To find the right ARPU amount for your customers, you need to quantify the value they get from your product. If corporate customers are drawing a lot of value from a product, but paying a minimal price for it, you should consider increasing the price.
The primary goal of the customer success function is to retain and grow customers. Your ARPU will increase over time if your customer success team works as hard as it should. As your ARPU grows, compare the cost of customer success with that of the customer to justify their role in your business.
The ARPU value is calculated by dividing the total sales by the number of active users on your website over a predefined period of time. If there is one metric that represents your ability to get and deliver value to customers other than ARPU, it is this.
One of the most prominent is the Average Revenue Per User (ARPU), which is calculated by dividing total revenue by the number of active users over a given period of time. The period used for ARPU tends to be the month, but it can be used as a formula that changes based on what customers are charging. ARPU, or Average Revenue per User, also referred to as Average Revenue Units, can help you understand how much subscriber for your business is popping up. It's an important metric to track SaaS, E-commerce and subscription businesses.
Divide your total revenue for a period by the number of active users you have for that period. That's 600 people, including free trial users, your super-loyal customers and those on the advanced plans.
The more revenue a single customer contributes each month, the more monthly revenue your business will have. The income that a single customer contributes per month is the sum of its entire life span for your business, adding up to its life value, which increases ARPU and increases LTV.
Continued growth is the other half of the equation for improving the value of customers "lives. As a hosting company, you should always be innovative and look for ways to update products and services in a way that is unique to your customers.
Large SaaS companies regularly update their products to add new features and capabilities that not only improve functionality, but also improve usability, scalability and security. When you release a new update, your current customers get added value in real time. Customers can unlock this new value by accessing and using the new feature or ability.
Continuous innovation cycles are critical to customer success in today's fast-moving and ever-changing business environment. By "Design for growth," we mean building a customer journey with incentives and motivators for the platform, not games. The design of the customer journey encourages customers to spend more.
The more customization and knowledge about the customer you can incorporate into the customer journey that leads to higher spending, the better your results will be. The information that helps your customers use your product will help not only increase ARPU but also reduce customer migration.
You don't have to search for new customers to increase your turnover and grow your SaaS business. Your existing customers are your biggest fans and can boost your monthly revenue, so focus on them with these tips to increase ARPU. Remember that it has added value for them so that it can be successful in the long term.
In order to improve and enhance your ARPU, it is time to look for customers with a larger budget. Adjust your personas and focus on paying customers (we're talking about reaching 1 million ARRs based on your average contract value strategy).
For example, bootstrapped SaaS companies with a high ARPU relative to their CAC allow them to build a profitable customer base. JustCall, which had revenue of $2.4 million in 2019, spends $200 per customer and has an ARPU of $150. Once you know what your customers are setting and selling prices for, the ARPU will increase.
Many publicly traded companies increase their margins and monthly ARPU by increasing their current customer base. The best way to increase ARPU is to measure key values (KPIs) to show how your customers are using your platform and selling what they are using. The most direct way to increase average revenue per user is to shift users to higher plans or sell relevant products.
If you help businesses manage their support tickets for example, you could create a price level based on how many support tickets they answer with your software per month.
A great way to increase your ARPU is to figure out how to increase your company's revenue. In fact, the average sales per user is a reliable measure, as it can be difficult to get customers and subscribers to pay more. But once you have a bunch of paying customers you love, you can experiment with ideas to increase your average revenue per user (ARPU - APU - Tinker).
We have given you 9 expert tips to increase your average revenue (ARPU) by more. We present the following snacks to help you increase ARPU as a source of revenue per user.