Get More from Every Customer - The ARPU Approach
The real key to scaling your ecommerce business is increasing the value of your current customers.
Your ecommerce store has a solid customer base, but your profits aren’t reflecting that growth.
The answer might not lie in acquiring new customers but in making the most of the ones you already have.
That’s where Average Revenue Per User (ARPU) comes in—a key metric that helps you understand how much value each customer brings to your business.
What is ARPU, and Why Does It Matter?
ARPU, or Average Revenue Per User, is a critical measurement for understanding how effectively your ecommerce business is converting customer engagement into revenue. In simple terms, it reveals the average income generated by each user over a given period.
For example, if your ecommerce store generated $10,000 in revenue last month from 200 customers, your ARPU for that month is $50 ($10,000 ÷ 200 customers).
Why does this matter?
It highlights your company’s market position. If Company X has a higher ARPU than Company Y, it indicates that Company X is likely offering higher-priced products or utilizing more efficient marketing and sales strategies.
This means you can improve profitability by increasing the value each customer brings—instead of just focusing on bringing in more customers.
Key Factors That Influence ARPU
ARPU isn’t just about revenue—it’s about understanding the levers that can increase customer value:
Product Pricing: Higher-priced or premium products directly impact ARPU.
Customer Segmentation: Targeting high-value customers or VIP segments increases overall ARPU.
Customer Experience: Personalized shopping experiences often lead to customers spending more.
Product Mix: Offering a variety of products at different price points encourages customers to purchase higher-value items.
Subscription Models: Subscription services or loyalty programs lock in recurring revenue, increasing ARPU over time.
Discounts and Promotions: Bundling products or offering tiered discounts prompts customers to spend more in a single transaction.
Customer Retention: Loyal customers tend to spend more over time, especially with rewards programs or loyalty perks.
Upselling and Cross-Selling: Promoting complementary or higher-end products can raise a customer's average spend.
Tracking these factors over time allows you to identify opportunities for ARPU growth.
Improve ARPU with Email MarketingUsing Email Marketing to Improve ARPU
1. Targeted Upselling and Cross-Selling
One of the most effective ways to improve ARPU is through email marketing. By sending targeted upsell and cross-sell emails, you can encourage customers to buy higher-value items or complementary products.
For example, if a customer buys a $50 product, offering a related product for $100 in a follow-up email can significantly increase your average order value.
Statistics show that businesses using upsell and cross-sell techniques have seen a 10-30% increase in order values.
By segmenting your email list based on previous purchases, you can tailor your product suggestions and optimize the value each customer provides.
2. Recover Lost Revenue with Abandoned Cart Emails
Did you know that 69% of online shopping carts are abandoned? That’s a lot of potential revenue left on the table.
With Retainful, you can automatically send abandoned cart emails, encouraging customers to complete their purchases.
On average, businesses recover around 15-20% of abandoned carts through email reminders, directly improving ARPU without requiring new customer acquisitions.
3. Strengthen Customer Relationships with Post-Purchase Emails
Increasing ARPU isn’t just about one-time sales—it’s about creating long-term customer loyalty. Post-purchase emails help you build relationships that keep customers coming back.
Sending personalized thank-you emails, offering exclusive discounts on future purchases, or even requesting product feedback fosters customer loyalty and boosts their lifetime value.
Companies using post-purchase follow-ups have seen repeat purchase rates increase by 25-30%.
Why Focusing on ARPU is Critical for Ecommerce Growth
ARPU reveals how well you’re monetizing your existing customer base and where there’s room for improvement.
Higher ARPU means you’re getting more value from each customer, which puts you in a better position to scale sustainably.
If your ARPU is lower than expected, it’s a signal to focus on increasing the value each customer provides.
Whether through targeted email marketing, improving your product offerings, or nurturing customer relationships, ARPU should be at the heart of your growth strategy.
ARPU Benchmarks and Tracking Over Time
Benchmarking your ARPU against industry standards can help gauge performance:
Fashion and apparel typically see lower ARPU (~$50).
Electronics or luxury goods might have ARPU around $200 or higher.
Tracking ARPU month-over-month can highlight trends. Growth might signal successful upselling, while decline could indicate a need to re-engage customers.
Key Takeaways:
ARPU measures the value your customers bring to your business and is a critical indicator of long-term growth.
Email marketing is a powerful way to improve ARPU through upselling, cross-selling, and recovering lost sales. Spending $1 gives you ROI upto $42.
Retainful can automate these email strategies, helping your business increase customer value without increasing acquisition costs.
Focus on increasing customer lifetime value (CLV) by building stronger relationships with your current customers.
ARPU directly contributes to Customer Lifetime Value (CLV). By increasing ARPU, you boost the total value of each customer, driving long-term profitability.
This helps your business grow sustainably, without increasing customer acquisition costs.