Terms

Average Revenue per User

Average Revenue per User (ARPU) is a metric that measures the average amount of revenue a company generates from each user or subscriber within a specific period. While originally a key metric for the telecommunications industry, it is now widely used by digital and subscription-based businesses to analyze growth patterns and profitability on a per-unit basis.

Importance of Average Revenue per User

ARPU is a vital tool for analyzing a company's financial health and growth trajectory. It allows management to identify which products or customer segments are most profitable. This insight helps refine pricing strategies and premium offerings to maximize revenue from the existing user base.

Externally, ARPU serves as a key benchmark for comparing performance against competitors within the same industry. Investors and analysts use this metric to gauge a company's efficiency and forecast its growth potential. It also informs user acquisition strategies by highlighting the most valuable channels.

Factors Influencing ARPU

Several key factors can significantly impact a company's Average Revenue Per User. These elements range from internal pricing decisions to the external competitive landscape. Understanding these drivers is crucial for developing effective strategies to boost revenue.

  • Pricing: The structure of subscription tiers, one-time purchases, and overall business model.
  • Upselling: The ability to move existing customers to higher-value plans or premium products.
  • Engagement: The frequency and depth of user interaction with the service or product.
  • Churn: The rate at which customers, particularly high-value ones, discontinue their service.

Average Revenue per User vs. Customer Lifetime Value

While related, ARPU and CLV offer distinct perspectives on customer value and business performance.

  • ARPU: This metric provides a snapshot of revenue per user for a specific period, like a month. It's simple to calculate and useful for ongoing health checks and competitor benchmarking. Enterprises use it for high-level tracking, while mid-market firms value its simplicity for monitoring growth. However, it ignores long-term value and profitability.
  • CLV: This metric forecasts the total net profit from a customer over their entire relationship with a company. It guides long-term strategy and acquisition spending by focusing on profitability. Enterprises rely on it for major strategic decisions, while mid-market companies use it to ensure scalable growth is sustainable. Its complexity is a key drawback.

Strategies to Increase ARPU

Boosting ARPU is a strategic imperative for sustainable growth, focusing on extracting more value from the existing user base. Companies can achieve this by refining their offerings, enhancing value, and targeting their most profitable customer segments.

  • Upselling: Encouraging customers to upgrade to higher-priced tiers or premium products.
  • Expansion: Cross-selling additional products or services to existing customers.
  • Pricing: Optimizing subscription tiers and price points to align with customer value.
  • Value: Continuously adding new features to justify price increases and encourage upgrades.
  • Segmentation: Identifying and focusing on the most profitable customer groups with tailored offers.

ARPU in Different Industries

ARPU differs greatly by industry, shaped by unique business models and revenue streams.

  • Telecommunications: Features high ARPU, with a notable shift from postpaid to prepaid plans.
  • Social Media: Shows significant variance, from high ad-based revenue to lower figures on other platforms.
  • SaaS & Apps: Spans from high-value enterprise subscriptions to low, ad-supported gaming models.

Frequently Asked Questions about Average Revenue per User

How often should ARPU be calculated?

ARPU is typically calculated monthly or quarterly. This frequency helps businesses track performance trends and the impact of strategic changes, like new pricing or features, while avoiding the noise of daily fluctuations. It provides a stable view for decision-making.

Is a high ARPU always a good sign?

Not always. While a high ARPU is desirable, it must be weighed against customer acquisition costs (CAC) and churn rates. A business model isn't sustainable if the cost to acquire and retain high-paying customers outweighs the revenue they generate.

How does ARPU differ from Average Revenue per Account (ARPA)?

ARPU measures revenue on a per-user basis, while ARPA tracks revenue per account, which may contain multiple users. ARPA is often more useful for B2B companies where a single customer account can represent numerous individual users.

Other terms

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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

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

Smarketing

Smarketing is the process of aligning your sales and marketing teams. This integration focuses on shared goals to improve lead quality and drive revenue.

Smarketing

Integration Testing

Integration testing is a software testing phase where individual modules are combined and tested together to verify their interaction.

Integration Testing

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

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

Digital Sales Room

A Digital Sales Room is a private online space where sellers share all relevant content with buyers to streamline the sales cycle.

Digital Sales Room

Business Continuity

Learn about business continuity, including understanding key components, steps to ensure continuity, common challenges, & best practices.

Business Continuity

Account Mapping

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

Account Mapping

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

Average Revenue per Account

Average Revenue per Account (ARPA) is the average revenue generated from each customer account, usually measured on a monthly or annual basis.

Average Revenue per Account

Subscription Models

Subscription models are a business strategy where customers pay a recurring fee at regular intervals for access to a product or service.

Subscription Models

Lightning Components

Lightning Components is a UI framework for building dynamic web apps for mobile and desktop devices on the Salesforce Lightning Platform.

Lightning Components

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

CRM Data

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

CRM Data

Positioning Statement

A positioning statement is a concise description of your target market and how your product or service uniquely fills their needs.

Positioning Statement

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

After-Sales Service

After-sales service is the support provided to customers after they've purchased a product. It includes things like warranties, training, or repairs.

After-Sales Service

AppExchange

AppExchange is Salesforce's cloud marketplace, offering a vast ecosystem of apps and expert services to extend Salesforce functionality.

AppExchange

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

Hard Sell

A hard sell is an aggressive sales technique that uses high-pressure tactics to push a customer into making an immediate purchase decision.

Hard Sell

Sales Rep Training

Sales rep training is the process of equipping your sales team with the skills, knowledge, and tools to effectively sell and hit their targets.

Sales Rep Training

ETL

ETL, short for Extract, Transform, Load, is a data integration process for moving raw data from various sources to a central data warehouse.

ETL

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

Infrastructure as a Service

Infrastructure as a Service (IaaS) is a cloud computing service that offers essential compute, storage, and networking resources on-demand.

Infrastructure as a Service

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

Smile and Dial

"Smile and dial" is a high-volume sales tactic where reps make numerous cold calls from a list, often with little to no prior research.

Smile and Dial

Referral Marketing

Referral marketing is a strategy that incentivizes existing customers to recommend a company's products or services to their personal network.

Referral Marketing

Monthly Recurring Revenue (MRR)

Monthly Recurring Revenue (MRR) is the predictable, recurring income a business expects to receive each month from all active subscriptions.

Monthly Recurring Revenue (MRR)

Inside Sales

Inside sales is a remote sales process where reps sell products or services via phone, email, and other digital tools instead of in person.

Inside Sales

Video Messaging

Video messaging involves sending short, personalized video clips to prospects or customers, replacing traditional text-based communication.

Video Messaging

Value Statement

A value statement is a clear, concise declaration of the unique benefits a company provides to its customers, outlining its core purpose.

Value Statement

Content Syndication

Content syndication is the process of republishing your web content on third-party sites to reach a much wider audience.

Content Syndication

Low-Hanging Fruit

Low-hanging fruit are the most obvious and easy-to-tackle tasks or goals that provide a quick, valuable return for minimal effort.

Low-Hanging Fruit

Point of Contact

A Point of Contact (POC) is the designated individual or department that serves as the main hub for information and communication on a matter.

Point of Contact

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

Contract Management

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

Contract Management

Nurture Campaign

A nurture campaign is a series of automated messages designed to build relationships with potential customers and guide them toward a purchase.

Nurture Campaign

Functional Testing

Functional testing verifies that software performs its intended functions as specified in the requirements, ensuring it works as users expect.

Functional Testing

Network Monitoring

Network monitoring is the continuous process of tracking a computer network's performance and health to detect and resolve issues proactively.

Network Monitoring

Big Data

Learn about big data, including understanding big data characteristics, benefits of leveraging big data, & challenges in managing big data.

Big Data

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

Voice Broadcasting

Voice broadcasting is an automated system that delivers a pre-recorded voice message to a large list of phone numbers simultaneously.

Voice Broadcasting

Revenue Intelligence

Revenue intelligence is the process of collecting and analyzing customer data to provide insights that help sales teams make smarter decisions.

Revenue Intelligence

Field Sales Rep

A field sales representative, or outside sales rep, travels to meet prospects in person, selling products or services directly within their territory.

Field Sales Rep

Deal-Flow

Deal flow refers to the stream of business proposals and investment opportunities that a company or investor receives.

Deal-Flow

MOFU

MOFU, or Middle of the Funnel, is the crucial evaluation stage in the buyer's journey where leads compare solutions to their known problem.

MOFU

Lead Generation Software

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

Lead Generation Software

Return on Marketing Investment

Return on Marketing Investment (ROMI) measures the revenue generated by a marketing campaign relative to the cost of that campaign.

Return on Marketing Investment

Site Retargeting

Site retargeting is a marketing strategy that shows ads to people who have previously visited your website but left without converting.

Site Retargeting

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

Day Sales Outstanding

Day Sales Outstanding (DSO) is a financial ratio that shows the average number of days it takes for a company to receive payment for a sale.

Day Sales Outstanding

Sales Script

A sales script is a pre-written guide of talking points that helps salespeople navigate conversations with potential customers.

Sales Script

Interactive Voice Response

Interactive Voice Response (IVR) is an automated phone system that uses voice and keypad inputs to interact with callers and route their calls.

Interactive Voice Response

Target Account Selling

Target Account Selling is a focused sales strategy where teams identify and pursue a specific list of high-value accounts.

Target Account Selling

Business Intelligence In Marketing

Learn about business intelligence in marketing, including the role of data in marketing BI, key components of marketing BI, & marketing BI vs. market research.

Business Intelligence In Marketing

Marketing Play

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

Marketing Play

Customer Relationship Management Hygiene

CRM hygiene involves regularly cleaning and updating your customer data to ensure your CRM system remains a powerful and reliable tool.

Customer Relationship Management Hygiene

80/20 Rule

The 80/20 rule, or Pareto Principle, posits that 80% of results come from just 20% of the effort. It's a key concept for prioritization.

80/20 Rule

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

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

Chatbots

Chatbots are AI-powered programs that simulate human conversation. They interact with users via text or voice, typically for customer support.

Chatbots

Revenue Forecasting

Revenue forecasting is the process of estimating a company's future revenue, using historical data and market trends to guide strategic planning.

Revenue Forecasting

Cloud-based CRM

A cloud-based CRM is a customer relationship management tool hosted online, letting teams access and manage customer data from anywhere.

Cloud-based CRM

Lead Enrichment Tools

Lead enrichment tools are platforms that automatically add missing data to your leads, like contact info, firmographics, and buying signals.

Lead Enrichment Tools

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

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

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

Total Audience Measurement

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

Total Audience Measurement

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

Contact Discovery

Contact discovery is the process of finding accurate contact details for potential leads, including names, emails, phone numbers, and job titles.

Contact Discovery

Intent leads

Intent leads are prospects who show buying signals through their online actions, indicating they're actively looking to make a purchase.

Intent leads

A/B Testing

A/B testing is a method of comparing two versions of something, like a webpage or email, to determine which one performs better with your audience.

A/B Testing

Sales Engagement

Sales engagement is the sum of all interactions between a seller and a prospect, aimed at building a relationship and moving a deal forward.

Sales Engagement

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

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

Sales Pipeline Management

Sales pipeline management is the process of organizing, tracking, and managing potential deals through every stage of your sales funnel.

Sales Pipeline Management

Customer Journey Mapping

Customer journey mapping is the process of creating a visual story of your customers' interactions with your brand across all touchpoints.

Customer Journey Mapping

Sales Playbook

A sales playbook is a guide that outlines your sales process, best practices, and tools to help reps sell more efficiently and consistently.

Sales Playbook

Net Promoter Score

Net Promoter Score (NPS) is a metric measuring customer loyalty by asking how likely they are to recommend your company or product to others.

Net Promoter Score

Guided Selling

Guided selling simplifies complex sales by giving reps step-by-step instructions and data-driven recommendations to close deals faster.

Guided Selling

Revenue Operations KPIs

Revenue Operations KPIs are quantifiable metrics that track the performance, efficiency, and health of a company's revenue-generating engine.

Revenue Operations KPIs

Sales Operations

Sales Operations, or Sales Ops, streamlines sales processes, manages tools, and analyzes data to help sales teams sell more effectively.

Sales Operations

Stakeholder

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

Stakeholder

No Cold Calls

No Cold Calls is a sales strategy that replaces unsolicited calls with warm outreach to prospects who have already demonstrated interest.

No Cold Calls

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

Freemium

Freemium is a business model offering a product's basic features for free, while charging for advanced or supplemental features.

Freemium

Account-Based Marketing Benchmarks

Account-Based Marketing (ABM) benchmarks are key metrics used to measure the performance and success of your targeted account strategies.

Account-Based Marketing Benchmarks

InMail Messages

LinkedIn InMail messages are a premium feature that lets you directly message any LinkedIn member, even if you're not connected to them.

InMail Messages

Channel Sales

Channel sales is an indirect sales model where a company leverages third-party partners, such as resellers or affiliates, to sell its products.

Channel Sales

Cybersecurity

Cybersecurity is the practice of protecting computer systems, networks, and data from digital attacks, theft, and unauthorized access.

Cybersecurity

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

B2C2B

Learn about B2C2B, including how B2C2B transforms sales, key strategies for B2C2B success, & differences between B2C2B and B2B2C.

B2C2B

Docker

Docker is a tool that packages applications and their dependencies into isolated environments called containers for easy deployment and scaling.

Docker

End of Quarter

“End of Quarter” (EOQ) refers to the final weeks of a business quarter when sales teams rush to meet quotas, often leading to a flurry of deals.

End of Quarter

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

Sales Enablement Technology

Sales enablement technology refers to software and tools that equip sales teams with the resources they need to close more deals efficiently.

Sales Enablement Technology

Hadoop

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

Hadoop

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

BANT Framework

Learn about BANT framework, including implementing BANT in sales strategy, advantages of the BANT methodology, & BANT vs. other qualification models.

BANT Framework