This KPI is able to give us a deep perspective of user trends and behaviors, however, that is not all. Below are some of the elements that ARPU allows us to access.
Drive growth in Recurring Monthly Revenue and Lifetime Value
The increase in average revenue per customer has a direct impact on monthly recurring revenue ( MRR ) measurements, since if customers have to pay more to receive the same products or services over time, the MRR will increase proportionally.
In addition, the money that consumers contribute to the company each month is a determining variable in the Lifetime Value or LTV , so the ARPU has a long-term influence on the life cycle of users, but with differences between the concepts that we will explain later.
Demonstrate feasibility
A business is profitable when its revenues exceed its expenses, that is clear. And ARPU is a metric that precisely manages to demonstrate this reality.
When the values obtained are low, especially united kingdom phone number list if we are talking about an SME, the projected life of the company is not encouraging , since it is evident that sustainability over time is not possible.
However, this is not the end of the road. What it tells us is that we need to increase our customer base to find an optimal point of profitability.
Understanding the price-earnings ratio
When a product provides a lot of value to users, it is undoubtedly an item for which they would be willing to pay more. However, if the ARPU proves to be low, one of the most common causes may be a disproportionate price-benefit ratio .
This may be evidence to understand that customers do not agree with the cost-value relationship, which allows establishing new strategies to optimize their experience and match their expectations.
