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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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)

Representational State Transfer Application Programming Interface

A Representational State Transfer (REST) API is a web service that uses a simple, stateless architecture for systems to communicate online.

Representational State Transfer Application Programming Interface

Drip Campaign

A drip campaign is a series of automated messages sent to prospects or customers over time to nurture leads and drive engagement.

Drip Campaign

Sales Calls

A sales call is a real-time conversation between a salesperson and a prospect, aiming to persuade them to purchase a product or service.

Sales Calls

Lead Nurturing

Lead nurturing is the process of developing and reinforcing relationships with buyers at every stage of the sales funnel.

Lead Nurturing

Brag Book

Learn about brag book, including crafting your outstanding brag book, essential components of a brag book, & brag book vs. resume: unveiling the differences.

Brag Book

Call Disposition

Call disposition is the process of labeling the outcome of a call. It helps sales teams track interactions and plan their next steps effectively.

Call Disposition

B2B Intent Data

Learn about B2B intent data, including how B2B intent data enhances sales strategies, sources of B2B intent data, leveraging B2B intent data for competitiveness.

B2B Intent Data

Stress Testing

Stress testing is a type of software testing that determines a system's robustness by pushing it beyond its normal operational capacity.

Stress Testing

Sales Funnel

A sales funnel is a model illustrating the customer's journey from initial awareness to the final purchase, narrowing down leads at each stage.

Sales Funnel

Payment Gateways

A payment gateway is a service that authorizes and processes payments for businesses, acting as a secure link between the customer and the merchant.

Payment Gateways

Opportunity Management

Opportunity management is the process of tracking potential sales from first contact to a closed deal, helping teams prioritize and win more.

Opportunity Management

Sales Pipeline Reporting

Sales pipeline reporting is the process of analyzing sales data to track progress, identify bottlenecks, and forecast future revenue.

Sales Pipeline Reporting

Behavioral Analytics

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

Behavioral Analytics

CRM Data

CRM data is the information businesses use to manage customer relationships. It covers contact details, purchase history, and communication logs.

CRM Data

Sales Intelligence

Sales intelligence is technology that gathers and analyzes data to help salespeople find and understand prospects and existing clients.

Sales Intelligence

B2B Marketing Attribution

Learn about B2B marketing attribution, including challenges in B2B marketing attribution, & key metrics for effective attribution.

B2B Marketing Attribution

OAuth

OAuth is an open standard for access delegation. It lets you grant apps access to your data on other services without sharing your password.

OAuth

Value Chain

A value chain is the series of business activities required to create and deliver a product or service, from conception to the final customer.

Value Chain

Programmatic Advertising

Programmatic advertising uses AI and real-time bidding to automate the buying and selling of digital ad space, targeting specific audiences.

Programmatic Advertising

Private Labeling

Private labeling is when a company rebrands a product made by a third-party manufacturer and sells it as their own.

Private Labeling

Challenger Sales

The Challenger Sales model is a methodology where reps teach prospects, tailor their pitch, and take control of the sales conversation.

Challenger Sales

Intent Data

Intent data tracks a user's online behavior—like searches and site visits—to identify signals that they are ready to make a purchase.

Intent Data

Shipping Solutions

Shipping solutions are services or software that streamline the logistics of getting products to customers, from label printing to final delivery.

Shipping Solutions

Hadoop

Hadoop is an open-source framework designed for the distributed storage and processing of extremely large data sets across clusters of computers.

Hadoop

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

Return on Investment (ROI)

Return on Investment (ROI) is a key performance metric that measures the profitability of an investment relative to its initial cost.

Return on Investment (ROI)

Performance Monitoring

Performance monitoring involves collecting and analyzing data to track a system's operational health and efficiency, ensuring it meets set standards.

Performance Monitoring

Customer Acquisition Cost

Customer Acquisition Cost (CAC) is the total cost a business spends to gain a new customer. It includes all sales and marketing expenses.

Customer Acquisition Cost

SPIN Selling

SPIN selling is a sales technique using a sequence of questions—Situation, Problem, Implication, Need-Payoff—to uncover a buyer's needs.

SPIN Selling

Channel Partner

A channel partner is a company that works with a manufacturer or producer to market and sell their products, software, or services to customers.

Channel Partner

Real-time Data

Real-time data is information processed and made available almost instantaneously, enabling immediate analysis and decision-making.

Real-time Data

Sales Prospecting

Sales prospecting is the process of identifying potential customers, or prospects, and initiating contact to convert them into paying customers.

Sales Prospecting

Buyer Intent Data

Learn about buyer intent data, including sourcing and interpreting buyer intent data, & key metrics in buyer intent analysis.

Buyer Intent Data

Simple Object Access Protocol Application Programming Interface

A Simple Object Access Protocol (SOAP) API is a web service that uses XML to exchange structured information between different applications.

Simple Object Access Protocol Application Programming Interface

CSS

CSS, or Cascading Style Sheets, is the code that styles a website. It controls the colors, fonts, layout, and overall look of a web page.

CSS

Weighted Pipeline

A weighted pipeline forecasts sales revenue by assigning a closing probability to each deal based on its stage in the sales funnel.

Weighted Pipeline

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

De-dupe

De-duping, or data deduplication, is the process of eliminating duplicate copies of data within a dataset to improve accuracy and save space.

De-dupe

Sales Performance Metrics

Sales performance metrics are key data points that measure a sales team's effectiveness in achieving its goals and driving revenue.

Sales Performance Metrics

B2B Sales Channels

Learn about B2B sales channels, including types of B2B sales channels, strategies for effective channel selection, & integrating technology in B2B sales.

B2B Sales Channels

Sales Funnel Metrics

Sales funnel metrics are key data points that track how effectively you're moving potential customers from awareness to a final purchase.

Sales Funnel Metrics

X-Sell

X-Sell, or cross-selling, is a sales strategy of selling additional, related products or services to an existing customer base.

X-Sell

Siloed

Siloed describes the isolation of data, teams, or systems within a company, which blocks collaboration and creates operational bottlenecks.

Siloed

Revenue Operations (RevOps)

Revenue Operations (RevOps) is a business function that aligns a company's sales, marketing, and customer service teams to drive predictable revenue.

Revenue Operations (RevOps)

Lead Qualification Process

The lead qualification process is how you determine which prospects are most likely to become customers by evaluating them against specific criteria.

Lead Qualification Process

Brand Loyalty

Learn about brand loyalty, including how to build brand loyalty, benefits of brand loyalty, measuring brand loyalty, & strategies for increasing loyalty.

Brand Loyalty

Competitive Intelligence (CI)

Competitive intelligence (CI) is the ethical gathering and analysis of market data to inform strategic business decisions and gain an advantage.

Competitive Intelligence (CI)

Content Curation

Content curation involves gathering, organizing, and sharing the most relevant online content on a specific topic for a particular audience.

Content Curation

Persona Map

A persona map visually outlines a target customer, detailing their goals, behaviors, and pain points to help your team build genuine empathy.

Persona Map

Applicant Tracking System

An Applicant Tracking System (ATS) is a software application that manages your entire hiring and recruitment process from a single dashboard.

Applicant Tracking System

Stakeholder

A stakeholder is any individual, group, or party that has an interest in an organization and the outcomes of its actions.

Stakeholder

Serverless Computing

Serverless computing is a cloud model where the provider manages servers, so developers can focus on code without worrying about infrastructure.

Serverless Computing

Account Mapping

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

Account Mapping

Lead Generation Tactics

Lead generation tactics are the strategies and methods used to attract potential customers and convert them into leads for your sales team.

Lead Generation Tactics

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

Data Encryption

Data encryption translates data into another form, or code, so that only people with access to a secret key or password can read it.

Data Encryption

Cold Email

A cold email is an initial outreach sent to a potential customer with whom you've had no prior contact, aiming to introduce your business.

Cold Email

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

Inbound Sales

Inbound sales attracts interested prospects who've engaged with your brand, letting sales reps connect with warm leads instead of cold outreach.

Inbound Sales

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

Inside Sales Metrics

Inside sales metrics are quantifiable measures used to track the performance, activities, and effectiveness of an internal sales team.

Inside Sales Metrics

B2B Data Enrichment

Learn about B2B data enrichment, including benefits of B2B data enrichment, implementing B2B data enrichment strategies, B2B data enrichment vs. data cleaning.

B2B Data Enrichment

B2B Data

Learn about B2B data, including sources and types of B2B data, leveraging B2B data for sales success, & ensuring the accuracy of B2B data.

B2B Data

API

An API (Application Programming Interface) is a software intermediary that allows two applications to talk to each other and exchange information.

API

SFDC

SFDC stands for Salesforce Dot Com, a popular cloud-based CRM platform that helps companies manage their customer interactions and data.

SFDC

GDPR Compliance

GDPR compliance means following the EU's strict data protection laws to ensure the secure and lawful handling of personal data.

GDPR Compliance

Sales Operations Analytics

Sales operations analytics is the practice of analyzing sales data to improve the efficiency and effectiveness of the entire sales process.

Sales Operations Analytics

Sales Plan Template

A sales plan template is a reusable document that outlines your sales strategy, goals, and tactics, providing a clear roadmap for your team.

Sales Plan Template

Direct Mail

Direct mail is a marketing method where businesses send physical promotional materials directly to potential customers' mailboxes.

Direct Mail

Hybrid Sales Model

A hybrid sales model blends traditional and digital sales methods to engage customers across multiple channels and buying preferences.

Hybrid Sales Model

Lead Response Time

Lead response time is the duration between a potential customer showing interest and your team's first point of contact with them.

Lead Response Time

Lead Qualification

Lead qualification is the process of determining which prospects are most likely to become paying customers based on predefined criteria.

Lead Qualification

Sales Stack

A sales stack is the suite of tech tools—from CRMs to prospecting software—that sales reps use to close deals faster and more efficiently.

Sales Stack

Sales Acceleration

Sales acceleration refers to strategies and technologies designed to speed up the sales cycle, enabling reps to close more deals, faster.

Sales Acceleration

Omnichannel Marketing

Omnichannel marketing creates a seamless, unified customer experience by integrating a company's various communication and sales channels.

Omnichannel Marketing

Customer Loyalty

Customer loyalty is a customer’s devotion to a brand, shown by their repeat purchases and engagement, driven by positive experiences and trust.

Customer Loyalty

Omnichannel Sales

Omnichannel sales is a strategy that integrates all physical and digital sales channels to create a seamless, unified customer experience.

Omnichannel Sales

Request for Proposal

A Request for Proposal (RFP) is a formal document that outlines a project's needs and invites qualified vendors to submit bids to complete it.

Request for Proposal

Email Engagement

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

Email Engagement

Sales Qualified Lead

A Sales Qualified Lead (SQL) is a prospect vetted by marketing and sales, deemed ready for a direct sales pitch after showing intent to buy.

Sales Qualified Lead

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

Firewall

A firewall is a digital barrier that protects a network by monitoring and controlling traffic, blocking unauthorized access and malicious content.

Firewall

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

Latency

Latency is the delay between a user's action and a system's response. It's the time it takes for a data packet to travel to its destination.

Latency

Gamification

Gamification applies game mechanics like points, badges, and leaderboards to non-game activities to boost engagement and motivate users.

Gamification

Kanban

Kanban is a visual project management method that uses a board to visualize workflow, limit work-in-progress, and maximize team efficiency.

Kanban

Complex Sale

A complex sale features a long sales cycle, multiple stakeholders, and a high-value transaction, demanding a strategic, consultative approach.

Complex Sale

Social Selling

Social selling is the art of using social media to find, connect with, build relationships with, and nurture sales prospects.

Social Selling

GTM

A go-to-market (GTM) strategy is an action plan that outlines how a company will reach target customers and achieve a competitive advantage.

GTM

Marketing Automation

Marketing automation uses software to automate repetitive marketing tasks, such as email marketing, social media posting, and ad campaigns.

Marketing Automation

Dynamic Segment

Dynamic segments are self-updating lists that group contacts based on real-time data, ensuring your outreach is always timely and relevant.

Dynamic Segment

Internal signals

Internal signals are data points from your own systems, like website visits or product usage, that indicate a customer's buying intent.

Internal signals

Payment Processors

Payment processors are companies that handle card transactions, connecting merchants with the banks needed to complete a sale.

Payment Processors

Win/Loss Analysis

Win/Loss Analysis is the process of systematically tracking and analyzing the reasons why you win or lose deals with prospective customers.

Win/Loss Analysis

Brand Awareness

Learn about brand awareness, including understanding its importance, building an effective strategy, key metrics to track, & examples in the real world.

Brand Awareness

Total Audience Measurement

Total Audience Measurement (TAM) provides a holistic view of content consumption, tracking viewership across all platforms and devices.

Total Audience Measurement

Target Buying Stage

The Target Buying Stage identifies a prospect's position in the buying journey, from initial awareness to the final decision to purchase.

Target Buying Stage

Cold Call

Cold calling is a sales technique where reps contact potential customers who have had no prior interaction with their company or product.

Cold Call

Sales Partnerships

Sales partnerships are strategic alliances where two companies co-sell products to expand their reach, generate new leads, and increase revenue.

Sales Partnerships