What is ARPU?
Average Revenue Per User (also known as Average Revenue Per Visitor or ARPV) is the average amount of revenue each user brings to your business.
Average Revenue Per User is calculated by dividing the total revenue by the total number of unique users:
Average Revenue Per User = Total Revenue ÷ Total Unique Users
If your total revenue is $100,000 and you have 500 purchasers, your Average Revenue Per User is $100,000/500 or $200 per user.
When considering Average Revenue Per User in eCommerce, it may seem intuitive to think that if you can increase conversions you will increase total revenue. However, it’s important to keep in mind that not all users buy the same amount of products, buy as frequently as others, or spend the same. If your conversion optimization strategy is tailored toward a large number of users but with smaller order values, this could ultimately raise your conversion rates but lower your total revenue.
How to Increase ARPU
Any strategy that is aimed at attracting and engaging more high-value buyers will help you increase Average Revenue Per User. Dynamic Yield offers a robust eCommerce personalization solution that helps retailers persuade more high-value users to buy using customer segmentation, data-driven product recommendations, and personalized advertising campaigns. Click to see how eCommerce personalization can help your business increase Average Revenue Per User.
Learn more about ARPU by reading our blog post: Here’s Why Average Revenue Per User is Your Most Important eCommerce Metric