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As an eCommerce business owner with a vision of seeing your online store grow and your revenue skyrocket, there are several important metrics to monitor so you make sure you are on the right track. Average Revenue per user (ARPU) is one of them.
Average Revenue per user (ARPU) gauges the revenue generated per customer in a defined period of time, typically monthly. It is a key indicator of the profitability and growth of your eCommerce business.
By understanding this metric and improving it, you will save marketing costs, boost customer lifetime value, and eventually, your business will scale up.
12 Ways to Increase and Optimize Average Revenue Per User
In this article, we will walk you through 12 ways to increase and optimize average revenue per user to increase tour online store revenue.
1- Target the right audience
Marketing your business to a broad audience can result in a poor conversion rate or at least convert customers with a low value in return. In other words, these customers might be interested in only one product or in only giving your business a go once, while targeting the right audience will get you long-term customers who are interested in the majority of your products because you meet their needs, fix a problem for them, or you basically match their interests.
2- Develop a Strong Customer Retention Strategy
If you want to improve the average revenue per user, you need to keep customers happy and not lose them to competitors. Study customers' insight to understand their purchasing habits and your strength points. Send your customers surveys to understand what you can improve for them and what your weakness points are.
All this will help you come up with a strong customer retention strategy and earn more revenue per customer.
3- Apply Personalization whenever possible
eCommerce personalization helps your customers make the most out of your business based on their preferences and interests. Personalization can be done starting from customer communications; emails, texts, and ads to the entire shopping experience; home page, product pages, and product recommendations, and ending with after-sale gifts and promo codes for their next purchase.
Personalization is a very powerful way to improve average order value (AOV) and, consequently, average revenue per user (ARPU).
4- Set up Loyalty programs
A study found that 84% of consumers say they’re more likely to stick with a brand that offers a loyalty program. Not only this, 83% of consumers who are part of loyalty programs say that the program influences their decision to buy again from the brand. This makes eCommerce loyalty programs increase both average revenue per user (ARPU) along with customer lifetime value (CLV).
5- Upsell and cross-sell
The art of convincing people to add more products to their order or come back for more products is a key tactic in increasing the average order value (AOV), average revenue per user (ARPU), and ultimately customer lifetime value (CLV).
This is referred to by upselling and cross-selling. During the checkout, you can show your customer products that are frequently bought together or similar products under a category they showed interest in. This is done through smart product recommendations.
6- Offer subscriptions
Consider using a subscription business model if applicable. For example, if you are in the food industry, build a subscription to send your customers their loved products monthly or bi-monthly. This can work for other products like skincare and haircare. You can use subscriptions if you have any set of products that can be used frequently and runs out quickly. This way you will boost the average revenue per user (ARPU).
7- Set variable and scalable pricing models
Increasing prices is directly followed by an increase in average revenue per user (ARPU). However, this must be done strategically or you can end up losing customers. What you can do when you increase the pricing is to offer other options where customers can save money when they order bigger amounts of the product "bundles".
You can also utilize other options like loyalty programs and incentives to lessen the customers' upset about the price increase.
8- Surprise and delight your shoppers
Discounts and gifts delight customers and make them feel appreciated. Surprising your shoppers will make you stand out from the competitors. Furthermore, customers are more likely to come back to buy more from you.
A report by Blippr found that online shoppers who received coupon codes spend 24% more than those who did not, and 29% of online shoppers will even add a product to their order - if it’s heavily discounted - that they didn’t originally intend to purchase.
9- Allow Free shipping after a minimum value
Offer free shipping if a customer spends more than a certain amount of money. This strategy will nudge customers to add more products to get free shipping. 73% of people are more likely to decide to buy an item if it includes free shipping. Moreover, 90% of consumers would shop online more often if given the option of free shipping. That makes free shipping a great way to tempt customers to spend more per order and come for more products again.
10- Provide top-notch customer service
Completing a sale is not what will help you increase revenue if this customer never returns. Spend time and effort on providing excellent customer service. Make sure your shoppers can find all the answers they need when they are about to buy, but more importantly, offer after-sale customer support if they have any concerns or issues or even simple questions like tracking their shipping or how to use a product.
A report stated that 78% of customers say that their most satisfying experience occurred because of capable and professional customer service representatives.
11- Send periodic emails and texts to your customers
Use email marketing and texting to push your customers to buy from you again. Don't forget to use personalization only to email them offers that match their interests and history of purchase and to recommend them products that work for them.
12- Use Smart Customer Segmentation
For all the above points, customer segmentation will help you achieve better results. By using smart customer segmentation, you can better create a personalized experience, show the right product recommendations, send the right marketing emails to the right customers, and even more.
Converted.in helps you with customer segmentation, automated customer communication, smart product recommendations, and targeted ads.
