Ventarketing, in short, is the union between the Sales and Marketing departments through a process of aligning objectives, KPIs and processes to generate greater efficiency.
If you improve your value propositions , ARPU should rise progressively. However, for this to happen, you need to find customers who are willing to pay for your products.
In this sense, ARPU provides a clear perspective of the strategies between Sales and Marketing and whether, ultimately, the two areas are working harmoniously to achieve the same goals.
It’s time to learn how to calculate it!
How to calculate Average Revenue Per User?
Calculating ARPU is very simple, the most afghanistan phone number list important thing to keep in mind is that the total number of customers will have a direct and proportional influence on revenue.
So getting a low ARPU does not mean that the business is a failure. Let’s go to the formula:
ARPU = revenue / number of users
To do this correctly, it is important not to consider those that are in free trial periods or with temporary promotions.
Now, do you remember that we promised to contextualize the differences between ARPU and LTV? Well, the time has come!
What is the difference between ARPU and LTV?
We explained above that LTV or Lifetime Value is a metric that represents the lifetime value of the customer , or the value of the time that the company obtains from its consumers while they are within its sales cycles.
Obviously, it is a value that is reflected in why use this method in b2b sales? the long term, that is, it is a marketing principle that takes into consideration the value of the relationship with the client as long as said relationship with the company exists.
Its most fundamental difference from ARPU is that LTV is intended to contextualize the profit that
the company obtains from other transactions and interactions with a customer on average, while ARPU shows the average revenue per customer.
However, both concepts are not opposites , since many times both are used in the same equations to provide some other metrics.
For example, if we multiply the ARPU by the average lifetime of a customer (1/ Churn rate ), we can obtain the LTV .
Let’s do a practical exercise:
If we assume that the churn is 10% per year, we can say that a customer lasts on average 10 years
(1/10). Therefore, if the ARPU is about $2,000 Mexican pesos per month and the average duration of
a customer is 120 months, the LTV will be $2,400,000 Mexican pesos in 10 years.
Or what is the same: LTV = ARPU x (1/Churn)
Do you want to know more about ARPU and how to optimize it to levels that allow sustainability? Follow our tips!
How to improve ARPU?
Below are some of the indicators you should follow to improve your ARPU:
1. Value metric
It allows you to determine the cost-benefit ratio , which allows you to see the value that is being provided and identify flaws in b2b reviews the price of the products in order to make adjustments.
In order not to lose money and achieve good average levels of revenue per customer, satisfaction
studies must be conducted to understand the point of view of consumers.
2. Customer retention
ARPU varies according to the number of customers you have . Therefore, knowing the retention rate and, more importantly, the monthly churn rate makes it easier for decision makers
to take action to reduce the number of consumers who move away from the brand .
3. Determine the Buyer Persona
Segmenting means being more precise in hitting the nail on the head. By determining the Buyer Persona, you can reach potential consumers who are more willing to consume your products and, consequently, increase the average income per customer.
These are the best tips we can give you to get started!