How to optimize the Average Revenue Per User
To grow a business, the owner needs to both talk the talk and walk the walk. Firstly, you need to be good at making promises. The tempting promises, if being made to right audiences at the right moments, will bring you expectable customers with greatest buying power. That is the talking part.
However, to walk the walk, everything is not as simple as how it sounds. Store owners have to take responsibility for fulfilling the promises. And if there is a metric which represents for your ability to retain and continually deliver value to customers than any other, probably it is ARPU.
Let’s look at ARPU brief definition as well as tips on optimizing this metric.
- What is Average Revenue Per User
- How to optimize the Average Revenue Per Customer
- Functional sale motivation tools for Magento 2
- What to keep in mind to reach the targeted ARPU
- Final words
What is Average Revenue Per User
ARPU as known as Average Revenue Per User is the value calculated by dividing the total revenue by the number of active users from your site, in a pre-defined time frame. For typical, it is about a month. ARPU is an increasingly common measurement of profit. The measure is very helpful to business management and analysts. The higher ARPU, the more value that business delivering to customers, the bigger profit they get.
How to optimize the Average Revenue Per Customer
Increase your average transaction size
Have you ever realized that whenever you visit McDonald’s, your bill exceeds your planned spending? The fast-food giant someway increase your transaction by offering to upsize or add complementary products like ‘Fry with that?’. By this way, you spend more, and they earn more from you. You get to eat more for the satisfaction, and McDonald’s will get more money.
There are multiple ways to do the same, to increase the average transaction size, like how McDonald’s do with their adding products offers:
This technique is how stores owner motivates customers to buy more product, by attaching others at the checkout stage. It is common that when going shopping, looking for some fashion items, you see the clothing retailer makes an effort to show a complete outfit set. So that the shoppers can see how particular items match each other. This will raise their intent to consider additional items, not excluding items similar to what they have already owned. The same for online shopper, extra offers such as Who Bought This Item Also Bought and Frequently Bought Together are likely to make customer up their wallet, give away the money. The bottom line here is, for cross-selling strategy, the offered products commonly is unable to alter the original one. They seem to well match or bring added value to each other, for example, memory cards for customer intending to purchase a digital camera.
Even E-commerce giants such as Amazon and eBay do not ignore this simple trick, because more than any others, they obviously consider how significantly benefit is offering this kind of suggestion.
You may want to read: The Differences Between Cross-Sells, Up-Sells and Related Products in Magento
Up-selling is not a new marketing technique, this strategy proves its own possibility and currently is one of the most dispensable sections of many online stores. Store owners usually display up-sell blocks on the original product pages, or any current page of visitors. In various cases, it is possible that a marketer or salesperson influence a customer into purchasing the latest version of the item, instead of the less expensive and less valuable current item. They do this in the purpose of increasing orders value, as much as possible. This might sound a little greedy someway; however, actually, up-selling is not that meaningless to customers. The shop owners get more money, but they deliver more value to customers, simultaneously. They take responsibility to satisfy their paying shoppers.
You may want to read: How to Add Upsell and Cross Sell Products in Magento 2?
There are undeniable reasons behind the increasing popularity of free shipping program all over E-commerce websites. As customers seem highly appreciate if they do not have to pay any additional fee for delivery. According to this, it plays a potential role in the online store’s competitive advantage. Many online shoppers have admitted that free shipping is a great reason to add more to their shopping cart.
You may want to read: Freeship: Why & When They Are Most Beneficial
Personalize your customer service.
Nowadays, customers not only want a professional customer service but also expect to be treated specially.
Regarding research by Media Post, 70% of customers have left shopping sites permanently because of poor customer service experience. On the other hand, ‘78% of customers say that their most satisfying experience occurred because of capable and professional customer service representatives’, the research pointed out.
Currently, offering personalized customer service is not terribly difficult. It only requires a management system which allows to gathering and store customer information and data. It would be a great interaction if you use Helpdesk software such as Zendesk or Freshdesk, or a CRM (Customer Relationship Management) tools, which enable you to gain and keep comprehensive records regarding customers, past interaction, contact details, social media profiles, etc.
There is a fact that customers are likely to remember your business if you remember their name. This is the awareness of being recognized, according to studies about brain activation, the name is the sweetest and emotional sound that a person can hear. Accordingly, customers usually passionate about hearing their own names, which lead to further interest and loyalty on your site.
More amazing, they are possibly willing to purchase what you are offering. Serve them with individual experience can be hard to scale, however, if you truly care about customers, such this effort is the vital part of winning them over.
Surprise and delight your shoppers
In e-commerce severe competition, store owners try their best to draw customers’ attention. Website friendliness and a surprising personal present can immediately make them get the feeling of being appreciated. Once they use to be impressed, your store will unintentionally spring to their mind when their needs come.
These are 20 great ideas, that are possible to remind your customer about your store, ‘physically’ and ‘psychologically’. Not as simple as being seen in an email box, you can let customers consider how delight is the store that they are going to purchase from. These are 10 surprising customer service ideas, which helps increase customers loyalty, boost repeat purchase, and spread a valuable word-of-mouth effect for your brand:
- Offer specials discount for VIP customers: a Membership program can well satisfy, and motivate the most promising customers to purchase more, even more than how much they are purchasing currently
- Offer your best customer first access to certain products: for some business, keeping new collection (or latest released product) private, and just reveal to your best customers can accordingly create social viral effects, and benefit your customer positioning strategy as well.
- Offer fun and playful customer service: Response from customer care team sometimes should be packed with personality. Let them know that there is a real person trying best to serve them, behind the screen.
- Repost pictures from customers on your site: If customers use your product and post a picture with it, for instance on their Facebook, give them the praise that they deserve. This can satisfy their expectation of attention, or even create great effects on influencer marketing.
- Teach your customers something new: There are many different ways to show that your site is a great source of information. A visual tutorial video, or informative blog content to what they are interested in, is one of the most engaging ways to do.
- Automate the customer service with loyalty programs: Earning points program can kill two birds with one stone. Not only can be considered as the motivation of the current purchase but also will be the reason lead them to the next purchase. Reward Point foe Magento 2 is one of the most reasonable ways to gain such those targets. With loyalty program, customers earn points, you ‘earn’ valuable loyalty from them, simultaneously.
- Send gift card to customers on appreciation day: Giving regular customers a gift card worth $10 while your lowest price product is around $40, it seems like an acquisition cost, rather than a pity business loss. Give-away to customers is the wise solution to increase conversion rate significantly and improve customers’ shopping experience. Gift Card extension for Magento 2 is the supportive tool to help online stores to gain this success.
- Send a Holiday or Birthday card: These occasions are exact 2 most expectable times over a year, people commonly would highly appreciate warm words from anyone, not excluding yours. Furthermore, they are willing to pay, for such those special occasions. In this case, nothing is better than they consider you firstly.
- Feature customer on your blog: Feature experience, relevant success stories of customers on the blog give them a spotlight, which helps them feel special. If they might not be motivated by being featured on blog, enter cash prize. Cash bonus for only very compelling stories, which are closely related to your niche, will never seriously hurt your budget. This will not only humanize your brand but also allow your content to be more picky and qualifying. For websites which are running on Magento 2 platform, free Blog Extension by Mageplaza is a perfect marketing tool, to manage blogs right in Magento backend.
- Have a donation in your customers’ name: If your brand donates to some specific charities annually, put customers’ name into the donor list, then send them automated personalized emails is a great way to improve inspiration value. This will significantly impact the loyalty of customers.
Charge the right amount — adjust pricing
The product’s increasing value should be reflected in the price, that is the reason why making a change in pricing does not always negatively matter. Applying the following methods can be good ideas to raise the average revenue per customer, without losing customers buying possibility.
- Only apply new pricing to new customer
- Keep existing price tiers, but add more expensive tiers with ultimate features
- Remove lower pricing tiers if possible
- If necessary, do micro price increases, so that customers will not complain
Functional sale motivation tools for Magento 2
1.Free shipping bar
With Free shipping bar module, a reminder will be displayed to buyers, to motivate them to add more into the shopping cart. By this way, online stores can convince their customers to checkout with a bigger cart. The conversion rate and revenue accordingly raise thanks to this announcement.
2.Frequently bought together
Mageplaza Frequently Bought Together for Magento 2 runs based on the already grouped list of related items which are usually bought with the initial product. The number of suggested products can be freely set in the backend, and there are many other outstanding possibilities such as Add all to Cart button, show total price, deselect suggested items, etc.
3.Who bought this also bought
Magento 2 Who Bought This Item Also Bought Module use stored purchase history in your site to identify products which are bought together, and display them when an item is being viewed or being added to the shopping cart. The more buying history can be recorded, the better and more plentiful suggested products that you will get.
A module supports administrator in setting their own related product rules, in a flexible way, by using conditions and actions in the backend. Magento 2 Automatic Related Products module allow users to do this. Unlimited rules enable displaying related, latest, random products up-sell, cross-sell products, daily deals, featured products as well as bestsellers. Auto Related Products also is compatible with Who Bought This Also Bought, and strikingly can be shown at 30 different location on pages, or in a customized position.
What to keep in mind to reach the targeted ARPU
Set the right detail sales goal
Sale goal, the same as any other target, obviously should be challenging. But simultaneously, it needs to be achievable. Below factors should be considered when setting targeted average revenue:
- Historical sales data and information
- Sale initiative and special occasion over the year
- The capacity of the sale team
- The popularity of your own brand
Serve specific groups of buyers by specific customer service
When going through the entire process of ARPU optimization, it will inevitably acquire certain experience to truly understand the market. This can be helpful for you, in delivering outstanding value to customers. In some case, it is reasonable to afford to focus on the top 1% potential customers. You can sell premium priced services with dedicated customer care team members. This includes premium support, customer success management and other forms of person-to-person engagement.
Learn to how to ignore - less potential buyers
By now, the store owner would have had enough business intelligence to narrow down market segments, as well as define the targeted customer. You can use predictive analytics to identify customer with high-growth potential, and obviously, who are least likely to have high-paying tiers.
The goal is to allocate more resources for up-selling and cross-selling to promising buyers, which will have a positive impact on your ARPU.
Considering about ARPU will help sharpen the ability to continually increase the delivered value to customers - and optimize the returns, accordingly. In long-term, this has a strong impact on the overall valuation of your company, as a result of the contribution to expected Customer Life Time Value. It is undeniable that one of the greatest ways to boost your business revenue is simply getting more money from your current existing buyers, which is reflected by ARPU.
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