Arpu - what is it and how to influence this indicator?

If your business is not focused on one-time purchases, but on the constant use of the product, to evaluate the effectiveness of the project is much more difficult. The conversion here is not a criterion. Why? Imagine the situation: the client purchased a premium account for 2 weeks, and then "merged" and switched to a competitor's service. The profit that such users bring is less than your promotion and advertising costs. In this case, a special business metric, ARPU, is used for analysis.

What it is

Average Revenue Per User is the average revenue per customer. With this indicator you can see how much money users usually "pour" into your services for the entire period of use.

Let us give an example. The cost of subscribing to the popular streaming service "Yandex.Music" is 200 rubles. per month. It's cheap, right? But for a year the active listener brings the company 2400 rubles, for 3 years - already 7 000. And this is not the limit. And for a person, these expenses are almost imperceptible. But if the same amount had to be paid immediately, even for the "eternal" premium access, there would be fewer people who would like it.

And one more thing that needs to be said, when speaking about what ARPU is. This concept should not be confused with the "average check" - a key indicator of efficiency in retail trade. In terms of Revenue Per User order for $ 100 and $ 10 to $ 10 - the same. But for high indicators, purchases should be made by existing customers.

The ARPU formula. Find out the true value of your subscribers

Ideally, regular customers should bring the company the largest percentage of profits. The more and more they buy - the less will be your advertising and marketing costs.

How to read ARPU? Its general formula is as follows: ARPU = S / A, where S is the total revenue from the entire network, and A is the number of your subscribers / subscribers.

This metric is directly related to only one element of the marketing mix - price. The more expensive the subscription and the connection of additional functionality, the higher the average income from the client.

Some marketers advise to monitor the dynamics of changes every month. But the potential of ARPU is fully disclosed only in long-term strategic planning. What do you think, why? Not all new customers will continue to work with you, most of them are "casual passers-by". If you want to focus on developing relationships with active subscribers, you need to analyze longer periods - 3 months, 6 months, a year. In this case it is desirable to consider only those who made purchases 2 or more times.

Effective work with the metric: set the right goals

By and large, to consider the average ARPU for the company as a whole is meaningless, especially if you work with several segments of consumers and offer them completely different services.

In order to extract maximum useful information from the analysis, it is first necessary to choose the direction and formulate specific tasks. Why can I use ARPU?

1. Study of different sales channels. You can determine where you come from the most "money" clients (advertising on the Internet, cold calls, recommendations of partners, etc.). Also you will see which channels are of low efficiency and only devour the marketing budget.
2. Evaluation of the effectiveness of the advertising campaign. In this case, the ARPU is calculated separately for each project. For example, you can compare the income from users, attracted from 2 landing page, "imprisoned" for different actions. Comparing several campaigns, you will get a more or less clear picture of what your customers like / dislike.
3. Analysis of the popularity of products. Here ARPU is considered in dynamics, that is, how the average income from a subscriber has changed for a certain period (month, quarter, year). Actually, if you recently changed the tariffs or added new services.

Of course, the list is not complete. In the same way, ARPUs of different segments of buyers (for example, young people and buyers over 35 years old) or individual regions can be compared. After this, the most difficult stage begins. You need to analyze the results and find the key factors that affect the increase or decrease of ARPU.

Underwater rocks

Beginning Internet entrepreneurs often ask: what ARPU should be? With what do you compare? In fact, there are no optimal values, even approximate values. Everything depends on the specifics of the niche and the company itself.

First, this metric is not needed by everyone. In IT and telecommunications, ARPU can be considered one of the key performance indicators. Cellular operators, developers of online games and applications, Internet providers - they all seek not to attract as many new customers as possible, but to "squeeze out" the maximum from each user. But if you sell one training course, the income from all users will be the same.

Secondly, the average revenue per user can only be an auxiliary indicator. It does not reflect the state of your business and possible problems. What is ARPU? This is a metric that shows how much subscribers spend, but not your profit. The calculation does not take into account the costs of advertising and traffic, taxes, etc. Therefore, even high values do not guarantee that you go into a plus.

5 marketing levers for increasing ARPU

Another significant drawback of this business metric - it does not give an idea of what, apart from prices, affects the level of income. But you can not beat the competitors, "pulling" only one lever. The behavior of the consumer is affected by a huge number of factors. And the main task is to make sure that he chooses not between your company and competitors, but between the options that you offer. How to achieve this?

Assortment of services and options

It should be updated as the needs of the target audience grow. People are more comfortable when everything can be done in one place. A vivid example - Internet providers. Now almost all of them offer cable TV services. The client connects both, and ARPU grows. Leases a Wi-Fi router - income is higher. Does not know how to configure it - another plus.

Do not be afraid to introduce new services. Even if the demand for them is low, you will not lose potential customers, and this is much more important.

"Filling" tariffs

Go ahead. How to get users to buy additional services? The easiest and relatively cheap way is to include them in the cost of basic tariff plans. This is actively used by mobile operators. Even if in fact you only need a good 3G Internet, you will receive minutes of calls and SMS to the load. However, the more opportunities the tariff provides, the higher its value in the eyes of the consumer. So, you can significantly increase the cost of your services.

There is another approach when the user chooses the options that he needs, and pays separately for each item. This works fine when standard tariffs have sufficient value in the eyes of the customer and differ from those of competitors. What is the plus? The user does not have a feeling that something is being imposed on him - it seems to him that he himself makes a choice and can give up certain services at any moment. In practice, this usually does not happen, but the connection of options can unnoticedly increase the cost by a factor of 1.5-2.

Together - cheaper

Packages are one of the most powerful tools for increasing subscriber ARPU. Usually they include 2-3 elements:

• "Lokomotiv" - the basis; A popular product with a consistently high demand.
• "Wagons" - new or little-needed services that need to be brought to the market.

Of great importance is the discount. The price of the package can be 70-80% lower than the cost of these same services separately. More often there are fixed packages, which include services with specific parameters: for example, Internet 50 Mbit / s and 100 channels.

Combine products at a price ("Economy", "Standard", "Premium") or adapt them to different segments of consumers. The second option is often used by banks. For example, in UniCredit Bank, motorists can receive a 3% cashback at gas stations, and travelers can save bonuses and exchange them for air tickets.

But in order to truly personalize your offer, it is better to give the user the opportunity to choose the appropriate option for each service. Discount in this case is calculated individually by a certain algorithm.

Service packages can and should be combined with tariff options.

Targeted newsletters

Do not forget to keep in touch with existing customers. After all, those who already use your services, it is much easier to offer a more expensive tariff or additional opportunities. For example, by sampling subscribers who monthly consume the largest amount of services, you can offer them an exclusive tariff plan, which is only 50 rubles. More expensive, but several times more profitable than the current one.

It's great, if users can fill out information about themselves in the personal cabinet on the site - marital status, availability of children, etc. These data will help you formulate personalized proposals for each group.

Bonus programs

And one more effective way to increase ARPU. What it is, everyone knows - the client receives a personal card, which every time you buy "drip" bonuses. Subsequently, they can receive a discount or exchange for other services. In addition, with the help of such programs it is possible to increase sales of certain products, offering several times as many bonus points for them.