Average Revenue Per Customer (ARPC) measures the average revenue generated per customer within a specific time frame.
This metric provides insights into the monetisation of individual customers and helps evaluate the effectiveness of pricing strategies. It's particularly useful for assessing Average Lifetime Value (LTV), monitoring market receptiveness, identifying high-value customer segments, and refining pricing models.
Total Revenue / Number of Customers
To calculate ARPC, divide your total revenue by the number of customers over a specific time period.
To increase ARPC, focus on driving up-sells and cross-sells; use customer data to make personalised upgrade recommendations that align with their interests and needs. Experiment with tiered pricing models to maximise value extraction from customers. Also, implement loyalty programs that reward repeat business. If you are unsure about price-setting, common advice is to increase prices until customers complain but they are still willing to pay.
A misconception is that increasing ARPC is solely the responsibility of the sales team. Enhancing ARPC is a cross-functional effort involving product, marketing, customer service, and sales. Another is that the best way to increase ARPC is by raising prices; in reality, other factors like retention, upselling, cross-selling, and the overall customer experience are equally important.