ARPU metric links revenue and product value, although at first glance this may seem strange, since only the financial side of the issue is discussed.
The point is that ARPU reflects the willingness of users to pay for a product. Let's imagine that a company has 3 paid tariff plans and a free trial period. The monthly payment for each of the paid options is $15, $20 and $30 respectively. Having calculated ARPU and received a value of $23, we can conclude that most users who make a purchase prefer more expensive tariffs.
Source: shutterstock.com
If a large portion of customers engineer data package choose the most expensive plan, it may indicate that they are willing to pay even more. If the company's product does not offer them this opportunity, then you risk losing profits.
An increased ARPU indicates that users value your product highly. If ARPU reaches the level of the average tariff cost, you can consider increasing prices.
If the indicator is closer to the price of a cheap tariff, this may be a signal to reconsider the marketing strategy.
How to achieve multiple growth in traffic and sales from your website?
Alexey Boyarkin
Dmitry Svistunov
Head of SEO and Development
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I have always been concerned about the issue of moving to a fundamentally new level. So that the indicators would grow not by 2 or 3 times, but by several orders of magnitude. From a thousand visits to ten thousand or from ten thousand to a hundred thousand, if we are talking about a website, for example.
And I know that such leaps are always the result of painstaking work in five areas:
Technical condition of the site.
SEO.
Collection of site semantics.
Creating useful content.
Working on conversion.
And at the same time, every manager needs an increase in sales and the number of applications from the site at the moment.
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Methods to Increase ARPU in E-Commerce
To improve ARPU and ARPPU indicators, standard marketing methods are used that contribute to:
attracting the user's attention to commercial offers and increasing their motivation to make a purchase, which helps advance the sales funnel;
increasing the average bill by holding promotions, offering promo codes, product recommendations and other marketing techniques carried out on the store’s website;
using lead forms with magnets, where the client leaves their contact information in exchange for a gift (demo version, test access to a tariff plan for a certain period, etc.).
The choice of specific tools is based on the analysis of ARPU and ARPPU, studying the dynamics of the average check, the volume of abandoned baskets, the cost of attracting and retaining customers, as well as other metrics. For example, with a low average check, product recommendation blocks can be used, and with abandoned baskets - remarketing, where online store advertising with reminders will follow the user on other web resources.
Let's list the most universal methods that will help increase the ARPU value without the need for global changes and large investments.
Trial period
If your online store offers premium accounts or subscriptions, such as Kasta Black's unlimited shopping, it makes sense to let users try out all the benefits of the offer. Some companies offer premium access for the first order, while others recommend purchasing it at a discount or for a nominal price. The trial period has the following benefits:
the user makes more purchases on favorable terms (free delivery to pick-up points or access to closed sales);
the level of loyalty to your store increases;
a list of favorite products or brands is created that the customer prefers to purchase in your online store.
According to experts, the first purchase in an online store is a test, since customers are usually not ready to spend a lot of money in an unfamiliar place. However, as users get a positive shopping experience, the average check and order volume increase significantly, increasing from 50 to 200%. In this context, the trial period is an excellent opportunity not only to retain a casual buyer and stimulate repeat sales, but also to use the word-of-mouth effect.
Cross-selling
When cross-selling, an online store offers its customers complementary products or services. For example, when buying an electric stove, the user can purchase an extension of the warranty period, installation and maintenance services, as well as a cleaning agent from the manufacturer.
Cross-selling
Source: shutterstock.com
Cross-selling can be both internal (when the seller offers their goods and services) and external (when the buyer has the opportunity to purchase products from partner companies). Offers are implemented directly into product cards, for example, through the sections "Buy with this" or "Cheaper together". In addition, additional services are offered in the block next to the product photo so that the consumer can easily pay attention to them.
Thanks to this, customers do not have to waste time searching for additional products, they do not forget about important purchases, and the offers remain relevant. The company receives additional profit and increases the average check by 5-15%.