Terms

Average Revenue per Account

Average Revenue per Account (ARPA) is a metric that measures the average revenue generated from each customer account, typically on a monthly or annual basis. Primarily used by subscription-based companies, this metric helps businesses understand customer spending patterns and evaluate the revenue-generating capability of their products or services.

Importance in Business Strategy

ARPA is a crucial KPI for evaluating a company's financial health and growth potential. It provides key insights into pricing strategies, product value, and customer segmentation. By tracking ARPA, businesses can identify their most valuable customer cohorts and make informed decisions to drive revenue growth and improve overall business performance.

Factors Influencing ARPA

Several key factors can significantly impact a company's Average Revenue Per Account. These elements range from internal pricing decisions to external market forces. Understanding them is vital for strategic planning and revenue optimization.

  • Pricing: The structure of pricing plans and tiers directly determines revenue potential per account.
  • Upselling: Success in selling additional products or premium features to existing customers boosts ARPA.
  • Segmentation: Targeting different customer groups, such as enterprise versus small business, often results in varied ARPA.
  • Churn: The rate at which customers, particularly high-value ones, cancel their subscriptions can lower the average.

Average Revenue per Account vs. Average Revenue per User

While often used interchangeably, ARPA and ARPU measure revenue through different lenses, making each suitable for specific business contexts.

  • ARPA: This metric tracks revenue per account, offering granular insights. It's preferred by enterprises, especially in B2B SaaS, as one customer may have multiple accounts. This allows for better segmentation and trend analysis, though outliers can skew the average if not monitored carefully.
  • ARPU: This metric calculates revenue per individual user. It's a simpler measure often favored by mid-market or B2C companies where the user-to-account ratio is typically one-to-one. However, it can be overly simplistic and may conceal important account-level revenue trends in more complex business models.

Methods to Increase ARPA

This is how you can strategically boost your Average Revenue Per Account.

  1. Encourage existing customers to upgrade to higher-priced tiers or purchase complementary products.
  2. Regularly review and adjust your pricing strategy to better reflect the value you provide.
  3. Introduce valuable add-on features or services that customers can purchase for an additional fee.
  4. Focus sales and marketing efforts on acquiring customer segments with a history of higher spending.

Industry Benchmarks and Comparisons

ARPA benchmarks differ significantly across industries, making direct comparisons difficult. Factors like pricing models, target customers, and whether a business is B2B or B2C heavily influence the metric. A high ARPA in one sector might be considered low in another.

For this reason, focusing on internal benchmarks is often more insightful. Tracking your ARPA over time, such as quarter-over-quarter, provides a clearer view of growth. This helps measure the success of pricing changes and upselling efforts effectively.

Frequently Asked Questions about Average Revenue per Account

How often should we track ARPA?
Tracking ARPA monthly or quarterly is standard. This frequency allows businesses to monitor trends, assess the impact of pricing changes, and make timely strategic adjustments without getting lost in daily fluctuations.

Is a high ARPA always a good thing?
Not necessarily. A high ARPA can be misleading if it's driven by a few large accounts, potentially masking high churn among the majority of your customer base. It's crucial to analyze it alongside other health metrics.

How does ARPA relate to Customer Lifetime Value (LTV)?
ARPA measures revenue over a specific period, like a month, offering a snapshot of current value. LTV forecasts the total revenue a customer will generate over their entire relationship, indicating long-term profitability.

Other terms

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C-Level or C-Suite

The C-suite, or C-level, refers to a company's most senior executives. Their titles usually start with 'Chief,' such as CEO, CFO, or CTO.

C-Level or C-Suite

Triggers

Triggers are predefined conditions that, when met, automatically launch a workflow or action, ensuring timely and relevant outreach.

Triggers

Proof of Concept

A Proof of Concept (PoC) is a small exercise to test whether a business idea or project is technically feasible and has real-world potential.

Proof of Concept

Follow-up

A follow-up is a communication sent after an initial interaction to continue the conversation, provide more value, or prompt a response.

Follow-up

Sales Enablement Platform

A sales enablement platform centralizes content, training, and analytics to help sales teams engage buyers and effectively close deals.

Sales Enablement Platform

Outside Sales

Outside sales reps sell products/services in person, traveling to meet clients and close deals face-to-face, outside of a traditional office.

Outside Sales

Market Intelligence

Market intelligence is the process of collecting and analyzing data about your target market, competitors, and industry to guide business strategy.

Market Intelligence

Direct-to-Consumer

Direct-to-Consumer (DTC) is a business model where companies sell products directly to customers, bypassing traditional retail middlemen.

Direct-to-Consumer

Conversion Rate

Conversion rate is the percentage of visitors who complete a desired goal, like a purchase or sign-up, out of the total number of visitors.

Conversion Rate

Video Email

Video email involves embedding a short video directly into an email. This lets recipients watch your message without leaving their inbox.

Video Email

Sales Development Representative (SDR)

A Sales Development Representative (SDR) is a sales specialist who finds and qualifies new leads, building a pipeline for the sales team.

Sales Development Representative (SDR)

Dynamic Pricing

Dynamic pricing is a strategy where businesses set flexible prices for products or services based on current market demands and other factors.

Dynamic Pricing

Enterprise

An enterprise is a large-scale organization, often a corporation, defined by its complex structure and substantial number of employees.

Enterprise

B2B Marketing Analytics

Learn about B2B marketing analytics, including key components of B2B marketing analytics, & getting started with B2B marketing analytics.

B2B Marketing Analytics

Email Engagement

Email engagement measures how your audience interacts with your emails. It includes key actions like opens, clicks, replies, and forwards.

Email Engagement

Microservices

Microservices is an architecture where apps are built as a collection of small, independent services that communicate with each other over APIs.

Microservices

Loyalty Programs

Loyalty programs are marketing strategies designed to reward repeat customers. They offer incentives like discounts or exclusive access to encourage retention.

Loyalty Programs

Self-Service SaaS Model

The self-service SaaS model allows customers to independently sign up, use, and manage a product without any direct help from the company.

Self-Service SaaS Model

Business Intelligence

Learn about business intelligence, including key components of business intelligence, the role of BI in decision making, business intelligence tools and techniques.

Business Intelligence

Fault Tolerance

Fault tolerance is a system's ability to continue operating without interruption when one or more of its components fail.

Fault Tolerance

Sales Intelligence Platform

A sales intelligence platform is software that provides sales teams with data and insights about prospects to help them sell more effectively.

Sales Intelligence Platform

Buyer’s Remorse

Buyer’s remorse is the sense of regret or anxiety that can arise after making a purchase, often questioning if it was the right decision.

Buyer’s Remorse

Predictive Analytics

Predictive analytics uses historical data, statistical algorithms, and machine learning to identify the likelihood of future outcomes.

Predictive Analytics

Lead Routing

Lead routing is the automated process of distributing incoming leads to the right sales reps based on predefined criteria.

Lead Routing

B2B Data Erosion

Learn about B2B data erosion, including causes of B2B data decay, strategies to combat data erosion, & measuring the impact of data erosion.

B2B Data Erosion

Adobe Analytics

Adobe Analytics is a leading web analytics solution for gaining real-time insights into user activity across websites and mobile applications.

Adobe Analytics

B2B Buyer Intent Data

Learn about B2B buyer intent data, including sources and types of buyer intent data, & key benefits of leveraging buyer intent data.

B2B Buyer Intent Data

Funnel Analysis

Funnel analysis is a method for understanding the steps users take to complete a goal, revealing where they drop off in the conversion process.

Funnel Analysis

Sales Director

A Sales Director leads a sales team, develops strategies, and is responsible for meeting a company's revenue targets.

Sales Director

Contract Management

Contract management is the process of creating, executing, and analyzing contracts to maximize performance and minimize financial risk.

Contract Management

Sales Performance Management (SPM)

Sales Performance Management (SPM) is a suite of tools and processes that help businesses monitor, analyze, and boost sales team performance.

Sales Performance Management (SPM)

B2B Data Solutions

Learn about B2B data solutions, including unlocking the power of B2B data, & key components of effective B2B data solutions.

B2B Data Solutions

PPC

Pay-per-click (PPC) is an internet advertising model where businesses pay a fee each time one of their online ads is clicked by a user.

PPC

Warm Email

A warm email is a message sent to a prospect with whom you have a pre-existing connection, like a mutual contact or a prior interaction.

Warm Email

Always Be Closing

“Always Be Closing” (ABC) is a sales mantra meaning every action a salesperson takes should be with the ultimate goal of closing the sale.

Always Be Closing

Sales Dialer

A sales dialer is software that automates outbound calling for sales teams, allowing reps to connect with more prospects in less time.

Sales Dialer

Fulfillment Logistics

Fulfillment logistics is the entire process of getting an order to a customer, from storing inventory to picking, packing, and final shipment.

Fulfillment Logistics

Accessibility Testing

Accessibility testing is a software testing method that verifies an application is usable by people with disabilities, like vision or hearing loss.

Accessibility Testing

Sales Development

Sales development is the process of identifying and qualifying potential customers to create a pipeline of sales-ready leads for closers.

Sales Development

Sales Sequence

A sales sequence is a series of automated touchpoints sent to prospects over time to guide them through the sales funnel.

Sales Sequence

FAB Technique

The FAB technique is a sales framework connecting product features to advantages and then to the specific benefits for the customer.

FAB Technique

AI-Powered Marketing

AI marketing uses artificial intelligence to analyze data, automate decisions, and deliver personalized customer experiences at scale.

AI-Powered Marketing

Conversion Path

A conversion path is the journey a visitor takes to complete a desired goal, such as making a purchase, filling out a form, or subscribing.

Conversion Path

Load Testing

Load testing is a type of performance testing that determines how a system behaves under both normal and anticipated peak load conditions.

Load Testing

User Interaction

User interaction is any action a user takes within a digital interface, like clicking a button, scrolling a page, or filling out a form.

User Interaction

Tire-Kicker

A tire-kicker is a prospect who shows interest in a product but has no intention of buying, wasting a salesperson's time and resources.

Tire-Kicker

Consultative Sales

Consultative selling is a sales approach where a salesperson acts as an advisor, focusing on understanding and solving a customer's specific needs.

Consultative Sales

CRM Analytics

CRM analytics is the process of analyzing data from your CRM to uncover insights that help you better understand and serve your customers.

CRM Analytics

Marketing Attribution

Marketing attribution is the process of identifying which touchpoints contribute to a conversion and assigning value to each of them.

Marketing Attribution

CPM

CPM, or Cost Per Mille, is a key advertising metric. It's the cost an advertiser pays for one thousand views or impressions of a single ad.

CPM

Objection Handling in Sales

Objection handling in sales is the process of responding to a prospect's concerns about a product or service to move the deal forward.

Objection Handling in Sales

Subject Matter Expert

A Subject Matter Expert (SME) is an individual with profound knowledge and authority in a particular area, topic, or industry.

Subject Matter Expert

Sentiment Analysis

Sentiment analysis, or opinion mining, automatically determines the emotional tone behind text—whether it's positive, negative, or neutral.

Sentiment Analysis

Product Qualified Lead

A Product Qualified Lead (PQL) is a user who has experienced a product's value, signaling a strong potential to convert to a paid customer.

Product Qualified Lead

Application Programming Interface Security

API security is the practice of protecting application programming interfaces from attacks, preventing data breaches and unauthorized access.

Application Programming Interface Security

Persona

A persona is a semi-fictional profile of your ideal customer, based on market research and real data about your existing customers.

Persona

Progressive Web Apps

Progressive Web Apps (PWAs) are websites that look and feel like native mobile apps, offering features like offline access and push notifications.

Progressive Web Apps

Compliance Testing

Compliance testing ensures a product or system adheres to specific regulations, standards, or policies set by governing bodies or organizations.

Compliance Testing

B2B Data Platform

Learn about B2B data platform, including key benefits of B2B data platforms, choosing the right B2B data platform, challenges in implementing B2B data platforms.

B2B Data Platform

Sales Metrics

Sales metrics are quantifiable data points that track and measure a sales team's performance against specific goals and objectives.

Sales Metrics

Marketing Budget Breakdown

A marketing budget breakdown is a detailed plan that allocates your total marketing funds across various channels, campaigns, and activities.

Marketing Budget Breakdown

Outbound Sales

Outbound sales is when reps proactively contact potential customers through cold calls or emails to generate leads and build a sales pipeline.

Outbound Sales

Dynamic Territories

Dynamic territories are fluid sales assignments that adjust based on real-time data, ensuring reps can focus on the highest-value accounts.

Dynamic Territories

Touches

Touches are the individual interactions you have with a prospect throughout the sales process, from emails and calls to social media messages.

Touches

Employee Engagement

Employee engagement is the emotional commitment an employee has to their organization, motivating them to contribute to the company's success.

Employee Engagement

Serviceable Obtainable Market

Serviceable Obtainable Market (SOM) is the portion of the market you can realistically capture with your current resources, sales, and marketing.

Serviceable Obtainable Market

Compounded Annual Growth Rate

Compounded Annual Growth Rate (CAGR) measures the mean annual growth of an investment over a specified period of time longer than one year.

Compounded Annual Growth Rate

Decision Maker

A decision-maker is an individual with the authority to make significant choices for a company, especially regarding purchases or strategy.

Decision Maker

Demand Capture

Demand capture is the strategy of engaging potential customers who are already actively looking for a solution that your company provides.

Demand Capture

Lead Scrape

Lead scraping is the process of automatically extracting contact information and other relevant data about potential customers from online sources.

Lead Scrape

Marketing Qualified Opportunity

A Marketing Qualified Opportunity (MQO) is a lead vetted by marketing as a genuine sales opportunity, ready for direct sales follow-up.

Marketing Qualified Opportunity

Salesforce Object Query Language

Salesforce Object Query Language (SOQL) is a query language used to search your organization's Salesforce data for specific information.

Salesforce Object Query Language

Business to customer

Learn about business to customer, including maximizing B2C sales strategies, B2C vs. B2B: unveiling differences, & core principles of B2C success.

Business to customer

End of Day

End of Day (EOD) refers to the close of business hours. It's a common deadline for tasks and reports to be completed before the workday ends.

End of Day

Sales Team Management

Sales team management is the process of leading, coaching, and motivating a sales team to achieve its sales goals and drive revenue growth.

Sales Team Management

Digital Strategy

A digital strategy outlines how your business will use online channels, data, and technology to achieve its goals and connect with customers.

Digital Strategy

Generic Keywords

Generic keywords are broad search terms that lack specific details like brand or location. They attract a wide audience with less specific intent.

Generic Keywords

Marketing Play

A marketing play is a repeatable tactic used to achieve a specific marketing goal, like generating leads or driving engagement.

Marketing Play

Bottom of the Funnel

Learn about bottom of the funnel, including maximizing conversions at the funnel's end, & strategies for nurturing bottom-funnel leads.

Bottom of the Funnel

Churn

Churn, also known as customer attrition, is the rate at which customers stop doing business with a company over a given period.

Churn

Hot Leads

Hot leads are prospective customers who have shown significant interest and are ready to buy, making them a top priority for sales teams.

Hot Leads

Quarterly Business Review

A Quarterly Business Review (QBR) is a recurring meeting to assess performance against goals and align on strategy for the next quarter.

Quarterly Business Review

Sales Presentation

A sales presentation is a formal pitch by a salesperson to a prospective customer, showcasing a product or service to secure a sale.

Sales Presentation

Jobs to Be Done Framework

The Jobs to Be Done (JTBD) framework focuses on understanding customer needs by identifying the specific 'job' they are trying to accomplish.

Jobs to Be Done Framework

Sales Manager

A Sales Manager leads a sales team, setting goals, analyzing performance, and developing strategies to drive revenue and meet targets.

Sales Manager

Sales Forecast Accuracy

Sales forecast accuracy is a key metric that compares your predicted sales revenue against the actual sales revenue you ultimately achieve.

Sales Forecast Accuracy

Unit Economics

Unit economics are the direct revenues and costs of a business calculated on a per-unit basis, revealing its fundamental profitability.

Unit Economics

Technographics

Technographics is data that outlines a company’s technology stack, helping B2B teams identify prospects based on the software and hardware they use.

Technographics

Geo-Fencing

Geo-fencing creates a virtual boundary around a real-world location. It triggers actions on a device when it enters or exits this area.

Geo-Fencing

Consumer Buying Behavior

Consumer buying behavior is the study of how individuals select, buy, and use products and services to satisfy their needs and desires.

Consumer Buying Behavior

Target Account List

A Target Account List (TAL) is a focused list of high-value companies that a business specifically aims to convert into customers.

Target Account List

Account Mapping

Account mapping is comparing your customer list with a partner's to find common prospects and unlock new sales opportunities.

Account Mapping

Behavioral Analytics

Learn about behavioral analytics, including implementing behavioral analytics successfully, & key metrics in behavioral analytics.

Behavioral Analytics

On Target Earnings

On-Target Earnings (OTE) is a salesperson's total potential pay, combining base salary and commission for hitting their sales quota.

On Target Earnings

Customer Buying Signals

Customer buying signals are the actions, behaviors, or statements a prospect makes that indicate they are moving towards a purchase decision.

Customer Buying Signals

Lead Generation Software

Lead generation software helps businesses automate finding and capturing potential customers' contact information to build sales pipelines.

Lead Generation Software

Account-Based Marketing

Account-Based Marketing (ABM) is a focused B2B strategy where marketing and sales collaborate to target and convert high-value accounts.

Account-Based Marketing

SEM

Search Engine Marketing (SEM) is a digital marketing strategy that uses paid tactics to increase a website's visibility in search engine results.

SEM

Average Customer Life

Average Customer Life is the average time someone remains a customer. It's a key metric for predicting revenue and measuring customer loyalty.

Average Customer Life

Overcoming Objections

Overcoming objections is the process of addressing and resolving a prospect's concerns or hesitations to move a sale forward.

Overcoming Objections